The Economist: Bitcoin consumes more electricity than the whole of Ireland. Myth or truth?

Recently in the media say that mining cryptocurrencies is expensive due to excessive energy consumption. “Bitcoin has attracted the attention of people for years”, so now he spends so much kilowatt, how much would be enough for a small state. Whether so it actually? The investigation was conducted by journalists of News.bitcoin.

How much electricity need for mining

Bitcoin is often portrayed in a negative light before the public. This time the cryptocurrency blame for excessive consumption of electricity. This negative news frequently appear even in reputable publications. In the last article, The Economist credited with the crypt of the precious resources wasted.

The newspaper refers to the opinion of cryptoexpert Alex de Vries.

Currently, the total power consumption of all equipment for mining of Bitcoin has reached 2.55 GW, which is approximately equal to 22 terawatt-hours. The same uses Ireland. Why Bitcoin needs as much electricity to produce something virtual?

Let’s skip all the technical features of the hashing algorithm Proof-of-Work and other theories. Let’s get right to the point — whether the network of major cryptocurrencies so “greedy”?

It seems that the journalists of The Economist misunderstood two things. First, analyze in detail the statistics of electricity consumption in Ireland. According to the CIA World Factbook, the country used 25 TWh in 2017. From 2011 to 2014 the consumption of the country amounted to 26 TWh every year.

In this case, the electricity consumption is calculated as the number of all generated electricity in the country. To this are added the imports and, consequently, exports are deducted. According to Eurostat, Ireland’s energy consumption grew by 38 percent from 1990 to 2015. Total Bitcoin consumes 3 TWh less electricity than Ireland. The difference is quite big, because 3 terawatt-hours is enough for countries like Malta or Andorra.

Now let’s talk about the financial side of things. Now every new Bitcoin generates a block of 12.5 coins. For mining a single block takes about 10 minutes, so that the day produces 1800 bitcoins. In dollar terms this is about 11 million at today’s exchange rate.

The remuneration should cover the costs of miners on electricity, depreciation, equipment maintenance and so on. Also do not forget that a large cooling systems also require electricity. In fact, only half the power consumption spent on food is of Asimov. Assume that miners spend half their compensation ($5-6 million) on production costs. Want to know how much the Irish pay for electricity?

It turns out that Ireland has one of the highest price tags for electricity in Europe. Kilowatt-hour in the country is 23.1 per cent, which is 13 percent more than in the rest of the EU. Simple arithmetic — every day citizens pay $ 19 million for electricity.

Due to the current state of the stock market mining is slowly losing its profitability. Especially in some countries where Bitcoin mining will not bring any income after expenses for equipment and electricity. For example, in Germany mining a single coin asik Antminer S9 will cost $ 7,500.

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