The production of Bitcoin has become so lucrative that some companies have turned from digging up gold to virtual mining.
Bitcoin’s energy consumption could power almost a quarter of the 25 million households in the UK for a year, according to a new report from Accounts & Legal. The Bitcoin mining industry currently accounts for an astonishing 0.13% of the entire world’s electricity consumption every year, currently consuming 28.8 TWh per annum.
A new Bitcoin is mined every 10 minutes, and it takes 20 barrels to mine it. The energy consumed in mining Bitcoin each year is the equivalent of 13,500,000 barrels of oil. At current rates, that is over £576 million of oil for 52,560 bitcoins, or nearly £11,000 per bitcoin in energy alone.
Mining for Bitcoin works like a lottery. Every ten minutes or so, mining computers collect a few hundred pending bitcoin transactions (a “block”) and turn them into a mathematical puzzle.
The miners have attempts (hashes) to solve the puzzle, whereby the mining computer must guess the block values of a 32-bit arbitrary number that could be anything between 0 and 2,147,483,648.
Today, one of the most advanced pieces of mining hardware available is the Antminer S9. The rig has a mining rate of 14 TH/s, making 14 trillion attempt to solve the puzzle every second.
Cheap electricity has made China the ideal country for Bitcoin mining. The yearly cost of energy necessary to mine Bitcoin determines the cryptocurrency's value. About 85 percent of the world’s Bitcoin trading volume comes from China.
Digging up gold
Countries with heavily subsidised energy are obvious mining haunts, but now the colder countries have something to offer that has nothing to do with the government, and doesn’t involve any legal grey areas that will come under scrutiny.
The production of Bitcoin has become so lucrative that some companies have turned from digging up gold to virtual mining, including HIVE Blockchain Technologies Ltd.
HIVE has set up shop in Iceland, because the colder conditions cool servers and reduce the amount of energy needed. Iceland is also ground zero for Hong-Kong-based Genesis Mining Ltd, which is building the largest ether mining facility in the world in Iceland.
Brendan Montague is Editor of The Ecologist and tweets @EcoMontague. For more detail, see Accounts & Legal's report on the energy consumed in mining Bitcoin.