Bitcoin is caught in the whirlpool of public opinion about power consumption and environmental pollution

How much electricity does Bitcoin mining consume across the entire network?

The consumption and dependence of cryptocurrency mining on electricity resources is self-evident. Even for the most advanced S19 Pro mining machine, electricity costs account for about 13% of the mining machine's revenue .

The electricity costs of some mining machines (Ant S7, Avalon A741, etc.) are even close to 100% .

In addition to the cost of mining machines, the biggest cost of Bitcoin mining is electricity consumption .

So from Sichuan, Inner Mongolia, to Central Asia and Russia, to Northern Europe, the United States and Canada, wherever electricity is cheap, there are Bitcoin mines.

Bitcoin is made of electricity

According to the Cambridge University Center for Alternative Finance, Bitcoin consumes about 130 terawatt-hours of electricity throughout the year , and this increases or decreases with Bitcoin price fluctuations.

What is the concept of 130 terawatt hours?

If Bitcoin mining power consumption is compared to a country's annual electricity consumption, Bitcoin ranks 28th , slightly higher than Ukraine's annual electricity consumption of 128.81 terawatt-hours in 2019 according to U.S. energy data ;

If the electricity consumed by Bitcoin was used to boil water in kettles across the European Union, it would last for 4.4 years ;

Or powering Cambridge University for 739 years .

The most serious criticism of Bitcoin is the waste of electricity resources and the carbon emissions caused by bioenergy generation.

However, people have not noticed that compared with automobiles and traditional industries, Bitcoin's electricity consumption and carbon emissions are just a drop in the bucket.

Another issue is electricity waste and carbon emissions.

Kazakhstan wastes 4,000 megawatts of electricity every year, while in Sichuan, China, the "wasted hydropower" reached 9.2 billion kilowatt-hours in 2019 alone , compared with 122 kilowatt-hours in 2018 .

In 2016, as much as 14.1 billion kilowatt-hours of surplus hydropower was unable to be connected to the grid, causing hydropower stations in Sichuan Province to lose about 4 billion yuan in power generation revenue.

The large-scale reduction in "abandoned hydropower" in Sichuan is closely related to Sichuan's status as a global mining center.

Sichuan's low electricity prices during the flood season have attracted many cryptocurrency mines to settle here, and "abandoned hydropower" has also found an outlet for consumption, which is a best of both worlds solution, and there is no air pollution or carbon emission problems.

Other Nordic countries that use clean energy for Bitcoin mining include Sweden, Norway, Iceland, and others.

They rely on new energy sources such as tidal, wind, and geothermal energy to generate electricity, which not only does not cause environmental pollution but also achieves effective utilization of resources.

And as hydropower, solar power, wind power, nuclear power and other new energy sources gradually replace fossil energy generation, it is estimated that Bitcoin mining will no longer be criticized as a factor causing global warming.

Another angle to think about is that Bitcoin mining has grown into a relatively complete industrial chain, and electricity resources as a basic element are constantly endorsing the value of Bitcoin. The more electricity resources are continuously invested, the more secure the value of Bitcoin becomes.

Therefore, more countries and individuals will inevitably participate in this "energy minting" movement in the future, and the transaction value of Bitcoin will be supported by the stability of electric energy.

Bitcoin’s Energy-Exchange Logic

It is no coincidence that Iran, Venezuela, Russia and other countries are listed in the list of countries with the largest distribution of Bitcoin network computing power.

In addition to the recognition of the value of Bitcoin and the relative abundance of electricity, the huge volatility of the currency and economic sanctions imposed by the country may be a more realistic option for developing Bitcoin mining and using electricity to exchange for foreign exchange.

A while ago, a video of the Venezuelan military participating in Bitcoin mining went viral.

Due to political instability, Venezuela's domestic inflation is severe, and the purchasing power of its sovereign currency, the Bolivar, has become worthless.

According to data, Venezuela's overall inflation rate has risen by 53,798,500% since 2016. Therefore, Venezuelans no longer use Bolivar and have begun to turn to other payment channels, mainly using US dollars and cryptocurrencies as settlement media.

There is also Iran, whose sovereign currency, the rial, has depreciated significantly in the face of US economic sanctions.

In the later period of Ahmadinejad's rule, the rial exchange rate continued to depreciate. The official exchange rate was adjusted from 10,254:1 in 2010 to 42,000: 1 in April 2018. Due to the impact of the epidemic in early April this year, the rial was equivalent to one US dollar in the free trading market at 166,000 rials .

In addition to various energy and financial sanctions, Iranian banks are prohibited from using SWIFT for cross-border trade settlements. Iran's oil revenues cannot be recovered and its overseas assets have been frozen, forcing Iran to seek US dollars, euros and cryptocurrencies as settlement currencies.

Iran has legalized bitcoin mining and amended cryptocurrency regulations to allow digital assets to be used for imported goods in certain circumstances.

In addition, in terms of residents' income and taxation , Bitcoin is obviously more advantageous because people seem to have no choice but to deal with inflation.

I believe that in addition to Venezuela and Iran, many countries are facing serious problems of inflation and economic sanctions. Although the US dollar and the euro are relatively stable, they still cannot escape the fate of excessive currency issuance.

Bitcoin seems to be such a settlement medium that is resistant to inflation, can be stably issued with its own domestic energy, and can circulate freely around the world.

Therefore, the existing financial environment is simply unable to prevent the flow of electricity and energy to Bitcoin mining and create value for economically turbulent countries.