To create just one Bitcoin, you probably will need as much electricity as the average American household uses in two years. And then, to keep the Bitcoin network running, you need the electricity that a medium-size country uses in just one day.
Or it might just be helpful to know that New Zealand and Hungary will require less energy than the Bitcoin network. Below you can see what Bitcoin consumes:
Bitcoin’s Energy Use
Called mining, Bitcoin creation involves solving an algorithm that gets increasingly harder as demand grows. One catch is the guessing part. Because the algorithm is so complicated, you can’t just figure it out with a laptop. You have to make lots of guesses that require massive computational power.
However, if you successfully unlock the 12.5 Bitcoins that are accessible every 10 minutes, you will be more than $100,000 richer. In addition, you will have participated in “a competition to waste the most electricity possible by doing pointless arithmetic quintillions of times a second.”
This sign refers to the Bitcoin mining computers that are for sale in Hong Kong:
Although most of the Bitcoin mining is done in China, I thought we could look at the following Lawrence Livermore National Laboratory energy chart to see the probable sources of U.S. Bitcoin miners’ electricity. It might be tough to see that the largest source, natural gas, is the light blue rectangle:
Our Bottom Line: Land, Labor and Capital
Although Bitcoin is virtual, creating it requires tangible resources. We need land, labor and capital for each stage. First natural gas, coal, and nuclear power would be developed. Then, they make the electricity that Bitcoin’s computers gobble.
Perhaps we should ask whether the opportunity cost is worth it.
My sources and more: Vox and the NY Times published fascinating descriptions of Bitcoin’s energy usage. Then if you wanted to continue (as did I), the next step is digiconomist and the Livermore Lab’s spaghetti diagrams. The quote in today’s post, our featured image, and the Hong Kong photo were from The Guardian.