The recent article (Code changes could drastically reduce bitcoin’s enormous electricity requirements) in Physics Today (APRIL, p. 26) - suggesting use of different coding as a means to control energy consumption of Bitcoin mining - was worthy of attention. As the piece notes, the Energy Information Administration (EIA) :
"estimated in February that cryptocurrency mining accounts for anywhere from 0.6% to 2.3% of US electricity consumption."
That is a lot and is having a major impact on our environment especially fueling climate change.
Bitcoin is by far the largest of the world’s more than 10, 000 cryptocurrencies, and to generate new bitcoins, mining companies must solve cryptographic puzzles that require vast computational resources. This has led to the rapid growth in electricity demand and an additional CO2 input that is approaching intolerable levels. According to the PT piece:
"Worldwide, bitcoin mining used more energy in 2020–21 than all but 26 countries, according to an October 2023 report by an academic arm of the United Nations. It emitted carbon dioxide equivalent to burning 38 billion kg of coal."
(As Physics Today went to press, bitcoin was trading at an all-time high price of around $73 000. Bitcoin mining—and its energy consumption—rises in parallel with the price.)
For the
uninitiated in the esoteric realm of cryptocurrency, "mining" is
a loose metaphor for what is going on. There is no actual mining as in
extraction of precious ores - like gold - to make bitcoin. It is instead based on the continuous use of powerful computers to keep solving numerical -
math problems and conundrums, in 10 minute stretches, to create the basis for
generating bitcoin. According to the website "Investopedia":
"Bitcoin mining is the
process by which new bitcoins are entered into circulation, but it is also a
critical component of the maintenance and development of the blockchain ledger.
It is performed using very sophisticated computers that solve extremely complex
computational math problems. Cryptocurrency mining is painstaking,
costly, and only sporadically rewarding. Nonetheless, mining has a magnetic
appeal for many investors interested in cryptocurrency because of the fact that
miners are rewarded for their work with crypto tokens."
The abstruse mathematics underlying cryptography enables bitcoin to exist in the first
place and is what drives computer energy consumption. The applicable coding needs to follow
that arc which allows most expeditious solution. Especially as the Mathematics may
entail solutions to the peculiar functions known as elliptic curves, i.e.
http://brane-space.blogspot.com/2016/12/peculiarities-of-elliptic-curves-and.html
Thus, for example, bitcoin uses elliptic curve technology - a
type of public key cryptography is needed to ensure the validity of
transactions. I.e. that the bitcoin you are using is every bit as valid as the
one I am using. You can learn more here: about elliptic
curve cryptography.
While this would pose a humongous problem for any virtual currency, Bitcoin attempts to solve it using what's called "blockchain". Basically, this is a registry of all the Bitcoin transactions to date, and which all users can see. It includes: when the Bitcoins were created and the dates for transactions between individuals. The problem then becomes ensuring the blockchain is accurate. This is accomplished using powerful, number crunching computers that basically solve fearsome elliptical equations that help in verifying the Bitcoin transactions, dates, and hence the blockchain is accurate. If not, then it would be possible to steal or duplicate the currency. Specifically, the amount of power consumed by this number crunching is equivalent to all of that consumed by Finland in one year, or 5.1 gigawatts. For comparison, the current largest bitcoin mining plant (in Texas) has a capacity of 700 MW and will soon be followed by a 1 GW plant. (The typical nuclear reactor produces about 1 GW of power).
Miners completing a new block
are currently rewarded with 6.25 new bitcoins. As the mining network has grown
over time, the computing power necessary to create new blocks has increased,
since the code automatically adjusts the difficulty to keep the time required
for completion of a block steady at around 10 minutes.
Nor is this likely to mark the limit of consumption. This is because bitcoin's energy intensive validation process - known as "proof of work"- is only likely to get more intense with time. This will arrive as more and more application-specific integrated circuits (ASICs) are incorporated and added to the blockchain. Clearly then, there must be a means or method to limit energy consumption and the greenhouse gases churned out.
Thankfully, environmental groups - including Greenpeace and the Environmental Working Group - have urged bitcoin to change its code to a far lower energy-intensive process called "proof of stake". Ethereum, the second-largest cryptocurrency, switched in 2022 to proof of stake, where large holders of the cryptocurrency offer some of their own holdings as collateral to validate new blocks and transactions in exchange for a chance to receive rewards. That change lowered the Ethereum network’s energy consumption by 99.9%, to an annualized 7.5 GWh. Alas, large holders of bitcoin have opposed change. One (BMC) says the energy is required in order to provide network security and tie the cryptocurrency’s value to the physical world. (The BMC claims that 60% of the energy consumed by the global bitcoin mining industry is supplied from sustainable, non-CO2-emitting sources—more green energy than is used by almost any other industry sector.)
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