Although dominance is decreasing, it is estimated that two-thirds of the bitcoins in circulation have been “mined” by Chinese servers, which in turn are highly dependent on energy produced at low cost from coal, around 60% of the total.
On 12 May thehashrate, index of computational capacity, reached a peak above 180 Ehash / s, but at the same time the Chinese component has started to drop from 65% of the maximum and continues to decline in these days after Beijing has slowed down the mining activity. While the American one is growing by 11% and Canada is also increasing its share: both are leveraging strong hydroelectric production.
Why does bitcoin consume so much?
Consumption increases proportionally with prices. The most pessimistic scenario outlined by Cambridge leads us to estimate a consumption of 500TWh per year in the hottest periods of last spring. To get an idea, Great Britain stops at around 300TWh. In short, the higher the price, the more energy it requires.
Why? The heavy energy consumption comes from the complex transaction certification system of major cryptocurrencies. The bitcoin it is a currency that allows transactions that avoid any type of banking intermediary: to verify the veracity of the transaction, a competition takes place to solve a complex cryptographic question that requires attempts to guess the right composition of numbers and letters that provide the solution. The first who manages to find it certifies the connection of the block to the blockchain with the consequent compensation in bitcoin. An operation that takes place every ten minutes and which is rewarded with a nest egg of 6.25 bitcoins.
It is clear that the more cryptocurrency is worth, the more miners will be willing to invest in computing capacity to solve the problem. Without worrying too much where the energy used comes from. There are those who claim that 75% of Chinese miners use hydroelectricity, but it is difficult to assess. The miners certification mechanism is defined as “proof of work”: specific work is required, the solution of the question, to guarantee the reliability of the system without intermediaries and the impossibility of being able to modify the transactions already certified by the blockchain.
As with any infrastructure that uses servers and computing capacity, the most immediate solution would be the use of renewable sources, as is already the case in the expanding world of cloud computing. Even for cryptocurrencies there are those who propose that energy for mining should be certified, even if this could lead to a double system, a double blockchain depending on the energy used. In fact, already today large mining farms are concentrating in places that tend to be colder, to facilitate the natural cooling of the machines, and close to renewable sources, mainly hydroelectric.
Several studies have shown that the share of electricity originating from renewable sources is increasing, with highly variable estimates ranging from 20 to 70%. Of course, the mining activity continues continuously, night and day, and therefore solves the problem of the accumulation of renewable energy, contributing to greater efficiency. On the other hand, competition on costs pushes to use the most convenient sources, which are not always renewable ones.
An alternative solution that is gaining ground is that of an alternative form of consent to the “proof of work”, which is less energy-intensive. In this sense, some blockchains use the “proof of stake”: a complex process that provides for a majority certification by certifier selected by lot among those willing to deposit their cryptocurrencies as collateral. And that in return they still receive a reward. But without consuming energy.