- Bitcoin miners are earning less from the venture.
- CryptoMonday.de has been analyzing data from the sector and concludes that miners spend over 75% of their earnings on electricity.
Bitcoin (BTC) mining is central to the sustenance of the BTC ecosystem. Besides enabling verification of transactions, it helps secure the network. The activity is so critical that the BTC network incentivizes miners in the crypto through the miners' reward. That said, it is proving to be expensive, with miners having to dig deep for electricity costs.
CryptoMonday has been studying data on BTC mining. The site concludes that miners' incomes are dwindling owing to soaring electricity costs. It reckons that over 75% of BTC miners' income goes to meeting electricity costs.
Jonathan Merry, CryptoMonday's CEO, has been discussing the data.
BTC mining is a very electricity-intensive process. A study has shown that a single BTC transaction consumes about 2165 kWh of electricity. That's what a regular American household would use in 74 days! Factor in the roughly $0.14/kWh that an average household pays, and the magnitude of expenditure becomes evident.Jonathan Merry
BTC's Proof-of-Work Consensus (PoW) Conundrum
One of BTC's core features, its proof-of-work (PoW) consensus mechanism, is also every miner's headache. PoW requires them to solve complex equations for a share of newly mined coins. The equations require the use of specialized mining equipment with high computational power. The equipment consumes tons of kilowatt-hours (kWhs), ballooning the miners' electricity bills.
BTC's mining difficulty further compounds the situation. BTC gets its value from its scarcity. Thus the system makes it progressively difficult for miners to complete their tasks. This forces miners to invest in mining equipment with even higher computational ability. And as indicated earlier, these come with hefty power bills.
BTC's Carbon Footprint
PoW has also come under criticism for its environmental footprint. Critics hold that it is a wasteful and unsustainable crypto for the universe. Again, studies have shown its carbon emissions to match those of entire nations. One of them estimates that BTC emits nearly 114 megatonnes of CO2 annually, a value comparable to Czech Republic's.
Such figures raise concerns about the king crypto's sustainability. Bitcoin is hardly mainstream, but it's already registering a significant carbon footprint. That reality is what's worrying its opponents. They claim that the broader adoption of the coin would significantly impact the global environment negatively.
Addressing BTC Energy and Environmental Concerns
Despite strong opposition from some quarters, BTC enthusiasts still believe in the crypto's value. They hold that notwithstanding the environmental concerns its usage raises, humanity has a lot to benefit from its wider adoption. They further contend that BTC's footprint is lesser than that of the traditional banking systems or idling appliances at home.
Besides, Bitcoinners hold that the industry is still in its infancy. As such, one would expect heavy investment in machines, some of which may be inefficient. But with its maturing, there's bound to be an evolution of the mining equipment to make them energy efficient.
Greening Bitcoin
Moreover, some miners have made the switch to fully renewable energy sources. Others are in different stages of that transition. Transiting to greener and affordable alternatives should help allay environmentalists' fears.
Other quarters have suggested a complete shift to a less energy-intensive consensus mechanism. One of the popularly touted ones is Proof-of-Stake (PoS). PoS is less energy and hardware intensive and will allow verification of transactions on everyday appliances like phones and PCs.
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