BIG IDEA | “Bitcoin alone consumes as much electricity as a medium-sized European country.”

‘ “Bitcoin alone consumes as much electricity as a medium-sized European country,” says Professor Brian Lucey at Trinity College Dublin. “This is a stunning amount of electricity. It’s a dirty business. It’s a dirty currency.” ’

• ‘At the upper limit, bitcoin’s electricity consumption would be about 500TWh a year.’
• ‘The UK consumes 300TWh.’

‘About 65 per cent of the crypto mining comes from China, where coal makes up around 60 per cent of the energy mix.’

• ‘A slice of the mining in China comes from clean hydroelectric power, including with machines that are transported from the north to the south of the country on trucks each year in the wet season.’
• ‘That hydro power is not necessarily diverted from anywhere else; some of these power stations were founded for factories that no longer exist.’

‘Energy consumption on some scale is a feature, not a bug, of bitcoin — a digital currency launched by the pseudonymous Satoshi Nakamoto 12 years ago.’

• ‘Its detachment from the global financial and governmental system — still the most alluring feature for users seeking anonymity or wishing to bypass central banks — means it needs a new way to establish trust and security.’

‘It does this by awarding miners coins in return for intensive puzzle-solving on the blockchain, making it a so-called “proof of work” coin.’

• ‘The puzzles are sufficiently hard to prevent hackers and other nefarious actors from taking control of the network, and the faster that miners can submit random numbers into the bitcoin algorithm, the more likely they are to unlock the coins.’

‘This all demands powerful machines running at full tilt.’

• ‘Luckily for bitcoin miners with access to cheap energy and efficient machines, it is usually worth it.’
• ‘The price of bitcoin has dropped by about $30,000 apiece since the peak last month, but it has climbed by more than 200 per cent since late 2020 and more than 1,000 per cent since 2019.’