Extracting US$1 of cryptocurrency such as bitcoin from the deep Web consumes three times more energy than digging up US$1 worth of gold, researchers said on Monday.
There are now hundreds of virtual currencies and an unknown number of server farms around the world running around the clock to unearth them, more than half of them in China, a University of Cambridge report showed.
In other words, mining virtual currencies with real-world value carries a hidden environmental cost that is rarely measured or taken into account.
“We now have an entirely new industry that is consuming more energy per year than many countries,” said Max Krause, a researcher at the Oak Ridge Institute for Science and Education and lead author of a study in the journal Nature Sustainability.
“In 2018, bitcoin is on track to consume more energy than Denmark,” he said.
Denmark consumed 31.4 billion kilowatt hours in electricity in 2015. As of July 1 this year, Bitcoin mining used up about 30.1 billion kilowatt hours, according to the study.
The highly competitive practice of mining cryptocurrencies requires hundreds, even tens of thousands, of linked computers running intensive calculations in search of the Internet equivalent of precious metals.
New coins are awarded to those who complete the calculations first, with the transaction confirmed and entered onto the blockchain, or the currency’s shared public ledger.
The top 100 cryptocurrencies have a market value of about US$200 billion, according to the Web site coinmarketcap.com.
Bitcoin accounts for more than half of that amount.
“We wanted to spread awareness about the potential environmental costs for mining cryptocurrencies,” Krause said. “Just because you are creating a digital product, that doesn’t mean it does not consume a large amount of energy to make it.”
The movies, music and videos that billions of people stream every day all have measurable environmental costs, earlier research has shown.
For the study, Krause and Thabet Tolaymat, an environmental engineer based in Cincinnati, Ohio, calculated the average energy consumed to create US$1 of four of the top virtual currencies — bitcoin, ethereum, litecoin and monero — over the 30-month period to June.
That amount was 17, 7, 7 and 14 megajoules (MJ) respectively.
A joule is a unit of energy equivalent to the work required to produce one watt of power for one second.
That is up to three times the energy needed to excavate gold, platinum or copper, they found.
Of the metals examined, only aluminum — at 122MJ per US$1 — was more energy intensive.
A complete calculation of the environmental cost of virtual currencies would take into account the banks of computers used to mine them.
“The computers are made with gold and other precious metals,” Krause said. “They are run aggressively, which means the hardware is destroyed much quicker than you or I would expect for regular use — maybe a year instead of five or 10.”
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