Khadija Khartit is a strategy, investment and funding expert, and an educator of fintech and strategic finance in top universities.
And this has birthed a new strain of malware, cryptojackers.
Article Reviewed on April 22, Khadija Khartit Updated April 22, Bitcoin may be a useful way to send and receive money, but cryptocurrency isn't created for free. The community of computer-based miners that create bitcoins uses vast quantities of electrical power in the process.
So how much electricity does a bitcoin take to produce? Written testimony presented to the U. Bitcoins are mined created by people around the world trying and solve the same mathematical puzzle using computers.
Then, a new puzzle is generated, and the whole process starts over again. Powered by the People As more people learn about bitcoin and mining—and as the bitcoin price increases—more of them are using their computers to mine bitcoins.
As more people join the network and try to solve these math puzzles, you might expect each puzzle to be solved sooner, but bitcoin is not designed that way. The software that mines bitcoin is designed so that it always will take 10 minutes for everyone on the network bitcoin via computer solve the puzzle.
It does that by scaling the difficulty of the puzzle depending on how many people are trying to solve it.
Regardless of how many people are actively mining, it always takes 10 minutes to solve a puzzle.
As more people join the bitcoin network and try to mine bitcoins, the puzzles become harder, and more computing power and electricity are used for each bitcoin produced. Calculating the Cost To understand how to calculate the electrical energy used to power the bitcoin network, bitcoin via computer need to understand how bitcoin creation works.
How Does Cryptocurrency work?
These individual sums are called hashes, and there are vast numbers of them—so many, in fact, that you have to think of them in terms of millions of hashes known as megahashes or billions of hashes gigahashes to make any sense of them.
In earlythe computers on the bitcoin network were close to exahashes per second. There are lots bitcoin via computer different bitcoin mining computers out there, but many companies have focused on Application-Specific Integrated Circuit ASIC mining computers, which use less energy to conduct their calculations.
If this information is correct, the bitcoin network in consumes gigawatts GW per second.
We started with Bitcoin, which was first described in by the Japanese Satoshi Nakamoto in the Bitcoin white paper. His idea: The establishment of a digital currency. This should be organized decentrally, i.
This converts to about 63 terawatt-hours TWh per year. At seconds 10 minutesall else being equal it will take 72, GW or 72 Terawatts of power to mine a Bitcoin using the average power usage provided by ASIC miners.
One watt per gigahash per second is fairly efficient, so it's likely that this is a conservative estimate since a large number of residential miners use more power.
Media outlets and bloggers have produced various estimates of the electrical energy used in bitcoin mining, so the accuracy of reported power use is sketchy, at best. Bitcoin Mining Costs Vary by Region To perform a cost calculation to understand how much power it would take you to create a bitcoin, you'd first need to know electricity costs where you live and the amount of power you would consume.
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More efficient mining equipment means less power consumption, and less power consumption means lower power bills. The lower the price of electricity, the less cost there is to miners—thus increasing the value of the Bitcoin to miners in lower-cost areas after accounting for all the costs associated with setup. Bitcoin's exchange rate has fluctuated wildly throughout its history—but as long as it's price stays above the cost to produce a coin, doing the work in an area where energy costs are very low is important to make the practice worthwhile.
The Real Cost of Mining Bitcoin The price placed on bitcoin in terms of energy consumption, and thus environmental impact, depends on how useful it's going to be to society. This then begs the question—if bitcoin continues to rise in popularity and price, how much more power will be consumed, and will it ultimately be worth the environmental cost? Article Table of Contents Skip to section Expand.