In the early years, mining Bitcoin required just a laptop, but the same no longer remains a viable option now as the power required to generate the world’s largest and most popular cryptocurrency has exponentially gone up. At present, Bitcoin consumes an estimated 133.64 terawatt-hours of electricity annually— more than used by Argentina, a nation of 45 million. Its biggest competitor, Ethereum, on the other hand, consumes about 78.01 terawatt-hours of electricity per year, which is comparable to that of Chile, according to Digiconomist’s Bitcoin and Ethereum Energy consumption Index.
This huge thirst for electricity comes from proof of work (PoW) consensus mechanism. The latter is a type of mining, wherein powerful computers race one another to process transactions, solving complex mathematical problems that require quintillions of numerical guesses a second. As a reward for this authentication service, miners receive new coins, providing a financial incentive to keep the computers running.
But it’s not just countries who have taken note of the harmful impact that cryptocurrencies leave on the environment, but corporations too are. In May 2021, the electric car maker Tesla suspended vehicle purchases using Bitcoin due to climate change concerns, its CEO Elon Musk informed in a tweet. Musk had long been a supporter of cryptocurrency. After his tweet, Bitcoin fell by more than 10%.
This story is from the September 2022 edition of Entrepreneur magazine.
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This story is from the September 2022 edition of Entrepreneur magazine.
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