The Energy Cost of Cryptocurrency
What is Blockchain?
The creation of cryptocurrency “coins” requires solving complex mathematical problems through the creation of blockchain. Cryptocurrency miners contribute their compute power to solve the problems and receive cryptocurrency coins for validating the blockchain process. Because the mathematical problems constantly become more challenging, the compute performance, and by extension power, needed to continue validating the process continually scales upward.
How Much Energy are We Talking?
Buildings used to house cryptocurrency mining can create a massive strain on local electricity grids, with a single crypto transaction consuming more energy than that required to power 6 houses for a day in the U.S. The estimated global annual energy consumption of the current cryptocurrency market is over 68 TWh, equivalent to more than 19 coal fired power plants operating continuously. Due to the technical nature of blockchain, this number is projected to grow to 100 TWh annually.
WAYS to increase the sustainability of cryptocurrency
Consider Different Algorithms: Rather than continuing to iterate on existing proof of work algorithms, other consensus algorithms exist which require less compute power, including proof of authority and proof of stake. Both alternatives have the potential to use less energy than current blockchain methodology.
Utilize More Efficient Hardware: Using more efficient mining hardware including the latest generation of computer servers and/or GPUs can not only increase performance, but also drastically increase performance/watt which saves energy and increases productivity.
Get More Creative With Location: Target physical mining locations near large renewable energy generation sites. These can include large PV installations in the desert Southwest, hydropower in the Pacific Northwest, abundant wind power in the Midwest, or leveraging ample free cooling in very cold climates like Alaska. Some international locations provide several of these benefits at once, such as Iceland with cool temperatures for free air cooling and ample hydroelectric and geothermal renewable energy availability.