One of the major cryptocurrency headlines came from Elon Musk earlier this year when he stated that Tesla would no longer accept payments for its cars in Bitcoin. Recall that Tesla was one of the world’s leading companies to accept Bitcoin payments which drew more investors into the cryptocurrency market. However, with this announcement made by Tesla’s CEO, there was a massive drop in the value of Bitcoin, and it’s been falling ever since.
While it remains a challenge to the financial world that one tweet can affect the value of money, we cannot deny the genuineness of the reasons behind the announcement. Cryptocurrency mining is good because it helps to keep Bitcoin in circulation. However, the many effects these Bitcoin mining activities have on the environment make it a potential threat. Due to this, many people have decided to buy XRP or any of the other eco-friendly options.
Aside from the environmental effect of mining cryptocurrency, the high electricity requirement is another challenging factor. You cannot learn how to mine cryptocurrency without first understanding the materials needed. One of such is coal or other fossil fuel, which is why much of Bitcoin mining activities are done in China.
Interestingly, many of us know that a huge amount of electricity is needed for mining cryptocurrency. But the real question is – how much electricity is required?
For A Start, What Is Cryptocurrency Mining?
Cryptocurrency mining refers to the entire process followed to confirm that a cryptocurrency transaction happened. This starts with completing a computation, creating a hash, and entering it into the public ledger. While this process may appear simple, many miners globally compete for it.
The high competition is to solve the computation, and the first miner to do that is rewarded with 6.2 Bitcoins which is a lot of money. To mine other cryptocurrencies like XRP, Ethereum, and Litecoin, this same process is followed.
A crypto mining rig is needed for mining cryptocurrency, and it uses different graphic cards. It also needs very powerful GPUs to process the calculations that provide the final result. As Bitcoin mining increases globally, not only is more electricity required, but graphics cards have started becoming less available.
How Much Electricity Is Needed For Cryptocurrency Mining?
Bitcoin mining takes a lot of energy; risk miners are willing to take because of how rewarding the benefit is. According to reports released by the Digiconomist’s Bitcoin Energy Consumption Index, an estimate of 1,544 kWh is needed to mine one Bitcoin successfully. Now, think of how much energy is needed to mine all the Bitcoin we have in circulation today.
It will interest you to know that the same amount of energy needed to mine one Bitcoin successfully can power an average US household for up to 55 days. Money-wise, it will cost about $200 to mine one Bitcoin.
Another report states that the energy required to mine Bitcoin every year is more than what is consumed by Argentina or Malaysia. As the cryptocurrency market continues to expand with more coins like XRP and Litecoin making their way into it, more energy will be required to mine these coins.
Why Does It Take This Much Energy to Mine Cryptocurrency?
As a newbie into the cryptocurrency market who is only interested in the prices of coins like XRP price, you may be wondering why crypto mining is so energy-intensive. The use of mining rigs is a major reason for the energy-intensive nature of cryptocurrencies. These mining rigs run on graphics cards that are operational all through the day.
The more GPUs a mining rig has, the more energy it will consume. Surprisingly, we have regions with up to 50,000 mining rigs, which is hotter than regions with fewer mining activities. In your study of how to mine cryptocurrency, you must have come across Kazakhstan. It is the area with one of the largest amounts of mining rigs, making it very hot.
Another reason why mining cryptocurrency takes that much power is the cooling requirement for these rigs. For some, they come with in-built fans that run on an energy percentage. The more rigs are available in a mining center; the more cooling systems will be needed. These cooling systems, in turn, require more electricity to run.
Much of cryptocurrency mining is done with fossil fuels which produce carbon dioxide. When this carbon dioxide absorbs heat, we have a greenhouse effect on the environment. To solve this problem, miners have to consider the option of renewable energy sources. However, based on a tweet by Elon Musk that 50% of miners have committed to renewable energy, it seems there is a solution in sight.
