Global banking giant Morgan Stanley has predicted in a memo to its customers that the mining of Bitcoins could use up more electricity throughout 2018 than the country of Argentina.
Bitcoin mining is the energy-intensive method by which the cryptocurrency both tests and validates transactions in which it has been used, as well as creating new coins. The process involves users confirming the veracity of payments made with the digital currency, forming a stable and reliable ledger of transactions which supports Bitcoin’s reputation as a safe and secure form of payment. In return for completing this verification service (such verified transactions being arranged in blocks – the cryptocurrency equivalent of a page in an accounting ledger), users are given the opportunity to receive a new batch of freshly-minted Bitcoins.
The time and effort required to mine a new coin (that is, to add a new block to the blockchain) utilises a huge amount of computational power which, in turn, demands large amounts of energy usage. Indeed, prior to the recent spike in the value of Bitcoin, the cost of the energy expended to mine a single coin far exceeded the worth of the coin itself. The commonly-accepted solution has been to undertake mining operations in countries where the cost of both the electricity and labour required for such a time-consuming task are significantly cheaper.
Both China and South Korea have been popular destinations for mining operations, but new regulations are on the horizon that might outlaw, or at least hinder, such set-ups in the future.
Regardless of cost, Morgan Stanley predicts that mining Bitcoin alone could account for as much as 0.6% of the total world electricity consumption this year. Though the most popular digital currency in the world, Bitcoin only accounts for around two-thirds of the overall market, so the total energy usage will likely prove to be even higher.
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