Governments Clamp Down On Energy-Hungry Cryptocurrencies
A strange whirring noise caught the attention of teachers at Puman Middle School in China’s Hunan province last year. For months, the sound hummed throughout the night and over the school’s holiday breaks. The internet slowed. The building’s electricity bill doubled.
When Chinese police went to investigate the complaint, they discovered a bank of specialized computers mining cryptocurrency—performing energy-intensive calculations that give many digital currencies their value. Authorities fired Punman’s principal in October for organizing the scheme.
This month, the Chinese government proposed a country-wide ban on cryptocurrency mining. The move comes on the heels of regulatory changes in North America that make it harder to run these operations.
A Montana county now requires new mining operators to offset their electricity use by funding local renewable energy projects as of early April. And areas flush with cheap hydropower in the Pacific Northwest and Quebec have barred new cryptocurrency operations over the past year.
The effort to restrict cryptocurrency mining operations around the world comes with a growing awareness of the massive energy toll of many of these currencies, notably Bitcoin.
“You have to imagine this whole network is running almost 45 quintillion calculations every second of the day,” Alex de Vries, a blockchain specialist told Living Lab. That’s something like making seven calculations for every grain of sand in the world. Every second.
Computers mining for bitcoin perform these immense calculations as though they are playing the lottery, explained de Vries. “All the machines in the network are just constantly generating numbers hoping that one of them is the winning one.”
By de Vries’ calculations, in 2018 the bitcoin network ate up as much electricity as the country of Hungary.
This is way more electricity than the traditional digital banking system. “Even in the most optimistic scenario,” de Vries said, “there will be an energy footprint per bitcoin transaction that is at least 1,200 times greater than the average non-cash transaction.”
Right now, bitcoin is still a tiny fraction of the world’s banking transactions, but it’s already a problem.
“The network is currently still consuming 0.2 percent of global electricity,” de Vries said. “We don't have the room to just lay back and wait to see how this plays out.”
If the bitcoin price were to shoot up, it could easily consume a more sizeable chunk of global electricty use, de Vries said. “This can go wrong really quickly.”
Elsa Partan produces Living Lab Radio. Heather Goldstone is executive producer.