Bitcoin, like any cryptocurrency, is a digital form of payment that is protected from theft through blockchain technology. Blockchains are stores of data that are linked together using cryptography in a digitally permanent “chain” of information. Adding new blocks involves solving a complex computational equations and validates new chains on the block. The addition of new blocks makes previous blocks harder to modify and thus more secure. Solving these complex computational equations, known as Bitcoin mining, generates new Bitcoin for the miner.
How Does Bitcoin Use Energy?
As mentioned, Bitcoin is created from computer-based solutions to complex mathematical equations in a process known as mining. The computers involved in mining use high amounts of electricity, often generated by fossil fuels. Since approximately two-thirds of global electricity is produced in power plants that utilize fossil fuels, its safe to presume that the extraordinary computational power required for mining is not all from renewable energy sources. The University of Cambridge (Centre for Alternative Finance) estimates that global Bitcoin transactions use around a hundred and forty terawatt-hours per year. Estimates are not exact, and its hard to tell exactly how much energy is used specifically on mining computations.
However, there are many mining hotspots in China, with Xinjiang being one of its powerhouses for Bitcoin mining. One of China’s predominant power sources is coal, an nonrenewable source of energy, which counteracts efforts to mitigate global warming. Bitcoin is a decentralized form of currency, which means that it isn’t controlled or validated by any single authority, it relies on the global cooperation of many computational processes- making Bitcoin a considerable source of energy use.