How much electricity Bitcoin Mining is consuming in the world?

Bitcoin can be mined

Cryptocurrencies such as Bitcoin can be “dug out” not only on exchanges but also using PCs and mining equipment.

But what does it mean to mine Bitcoin in the first place?

And how much energy is being used around the world for Bitcoin mining?

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How does Bitcoin and Blockchain work?

First, let’s briefly explain how Bitcoin works.

The actual database of Bitcoin is called “blockchain”, and it contains all the remittance records made on Bitcoin so far.

A remittance record is an information such as sending 1 BTC coin to address B and 2 BTC coins to address C using 3 Bitcoin (BTC) coins owned by address A.

One remittance record is called a transaction.

All transactions contained on the blockchain are guaranteed to be consistent so that Bitcoin does not grow on its own.

For example, the history of sending 3 BTC from a coin with only 1 BTC and the history of using the same coin more than once are not included in the blockchain.

Ordinary Bitcoin users do not build blockchains directly.

When a general user wants to make a transaction, he/she creates a transaction, digitally signs it, and sends it to the P2P network of people who build a blockchain called “miner”.

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How does Bitcoin mining works?

The miner puts the transactions sent by the user into a block and broadcasts them to the P2P network.

After that, the transaction is stored in the block in the form that another miner bundles the transaction into another block and sends it to the network.

In order to save the order of transactions correctly, each block contains the ID of the previous block, which causes the blocks to form a chain like a pointer reference.

A computer with a certain level of performance is required to participate in mining.

When it comes to participating in mining as a full-featured node, you need to store the ever-growing entire blockchain (currently around 300GB) on disk and align each transaction and block sent from the network.

Miners will have problems with the reliability of Bitcoin if there is not a certain number.

In Bitcoin, assuming that the majority of miners are implementing Bitcoin correctly, which one is similar to the majority vote that the blocks they think are the first are roughly the same.

Whether it’s an orthodox chain or not is somehow decided, so if there are few participants, it will be easier to cheat.

For example, in an extreme case, if there is only one minor, mutual verification is not performed, so even illegal transactions can be included in the chain as much as you want.

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Incentive (Payments) for Miners

So, in order to give the miner an incentive to participate in mining, each block may contain only one transaction with no remittance source and using that transaction the miner is currently at 12.5 BTC.

It is supposed that you can create new coins.

Of course, the miner specifies himself as the remittance destination for the transaction, so the reward for creating the block is 12.5 BTC.

This is about 0.1 million dollars at the current rate.

It is desirable that the miners who create blocks are as unbiased as possible.

If the miners who create blocks are biased, you can start with a long time old block and add new blocks one after another to create a branch that is longer than the chain that everyone thinks is the main chain.

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Cryptographic Hash Function SHA256

In Bitcoin, the longest branch is supposed to be the main, so if such a thing is done, the transactions made on the branch that we thought to be the main are subtle.

Therefore, in order to distribute the right to generate blocks to as many people as possible, it is necessary to draw some kind of lottery in order to generate blocks.

Specifically, the hash value of a block is calculated with a cryptographic hash function called SHA256, and it is considered to be a correct block only when the beginning of the block is currently about 75 bits with consecutive 0s

The hash value of a block can be easily calculated by any miner who receives the block, so once the correct block is created, anyone can easily verify that the SHA256 lottery has been successfully drawn.

However, it is not possible to predict in advance what will come out as a hash value, so in order to get a hash value with the first 75 bits being 0, change the contents of the block little by little and calculate SHA256 anyway.

There is no choice but to try (there is a field in the block where the contents can be changed randomly for this purpose).

This is the same as the probability that a coin will be thrown and the table will appear 75 times in a row, and the expected value is that the answer can only be found by calculating the hash value 2⁷⁵ times.

This is a surprisingly low probability.

However, since Bitcoin calculates SHA256 about once per second as a whole, the correct answer is found in 10 minutes on average (actually, the parameter of 75 is automatically adjusted from time to time so that it is about every 10 minutes.).

The block of the person who is lucky enough to find the correct answer will be broadcast to the P2P network as a new first block.

So, to summarize the story so far, mining is the work of creating blocks and continuing to calculate SHA256 hashes.

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How much electricity Bitcoin Mining is consuming

So how much resources does Bitcoin consume to draw the SHA256 lottery?

Let’s think about this for a moment.

In the idyllic era when Bitcoin was just a toy, miners were calculating SHA256 on a regular CPU.

After that, when the price of Bitcoin went up, competition became fierce and everyone started to use GPU immediately, then FPGA, and finally a dedicated chip (ASIC) was designed, and a dedicated data center.

It has reached the level of installing mining equipment on a large scale.

The big industry was created to draw the SHA256 lottery, which is meaningless in itself, as efficiently as possible.

As you can see, Bitcoin is a network of a wide variety of hardware, and the total number of participants is unknown.

However, the resources consumed by Bitcoin as a whole can be easily calculated.

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How many resources does Bitcoin consume?

Let’s assume that the overall reward from mining is 0.1 million dollars every 10 minutes on average.

If the entire network spends only 0.01 million dollars every 10 minutes, the expected return of participants is 10 times, which is a very good business.

Therefore, in such a situation, the number of new entrants will increase steadily.

On the other hand, if the entire network spends 0.2 million dollars every 10 minutes, some people will withdraw because they can expect an average return of only half of the money they spend.

After all, mining rewards and minor costs are consistent in the long run.

Electricity costs most of the cost of mining.

Therefore, Bitcoin spends 0.1 million dollars on electricity bills every 10 minutes as a whole.

The monthly amount is about 0.4 billion dollars, and the annual amount is about 5 billion dollars.

The resources that can be spent on mining are proportional to the price of Bitcoin.

For example, if the price of Bitcoin doubles, a mining business will be established even if one trillion dollar is spent annually.

On the other hand, it can be said that no matter how much the competition for efficiency improvement of mining heats up, the number of resources used for mining will not change as long as the price of Bitcoin does not change.

Is this cost wasted? Well, it’s useless.

In Bitcoin, in order to decide who will make the next block, all the participants continue to draw the winning lottery with a probability of 1/2⁷⁵, but such a mechanism is not absolutely necessary.

Another mechanism is to distribute some kind of tokens in advance and decide who will create the block depending on whether or not they have “win” tokens.

It’s a different model, but if you don’t mind P2P, you can just put a 300GB database somewhere.

This also costs almost nothing.

However, even if you create a mechanism to replace Bitcoin, it is extremely difficult to gain the same popularity as Bitcoin.

Bitcoin is valuable because everyone thinks it is valuable, and even if you make something similar only in the mechanism, no one will find authority or legitimacy there.

Bitcoin was just there from the beginning, and when people started to think it was worth it, the cost of mining increased proportionally, and this cannot be stopped by anyone.

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Is Bitcoin Mining consuming too much energy in the world?

If a huge amount of energy is used for Bitcoin mining, how much is it affecting the global environment?

In fact, this is also fairly easy to calculate.

According to Wikipedia, the global energy cost is about 6 trillion dollars.

In other words, 5 billion dollars is a lot of money, but on a global scale, Bitcoin mining is a level that can be ignored compared to other human activities.

I don’t think Bitcoin mining is a big deal, as humans are actually doing a lot of activities that they don’t have to do.

Precious metals such as gold, for example, are simply stored in a safe without any significant portion of the mined resources being used, and they are completely stored for purposes other than “owning” them.

In other words, the resources used to mine precious metals, like Bitcoin, can be said to be wasteful in a sense.

Precious metals such as gold have a good price because everyone wants them, and they are “mining” with huge amounts of money to meet that demand, but the composition itself is very similar to Bitcoin.

What’s interesting is that gold and the like are glittering and beautiful, so everyone has wanted them since ancient times, and it has been regarded as valuable because there are many people who want it, but Bitcoin is not glittering and in the first place.

The same composition is established even though it does not form.

It’s an abstract story, but it’s true that Bitcoin has a good price so far.

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