Destroying the myths: Bitcoin uses much less resources than it seems
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How can we calculate the spending on maintenance of the one dollar bill? For example, the cost of mining one bitcoin is easy to determine in the expenses for electricity and equipment. The power of cryptocurrency is one of those places that like to beat opponents crypts in almost any dispute.
According to them, digital assets consume too much electricity. Therefore, their worldwide adoption may plunge the Earth into an energy crisis. And yet this view is not quite true, as Fiat currency is also require constant maintenance even after leaving the printing press.
thethe Myth is to print money easier
Mining is often compared to the printing of money, and in comparison is the process of applying the paint to the paper denominations. In fact, each bill requires the transportation, protection and distribution between financial institutions. All of this is new money and physical effort.
For the normal functioning of Fiat money need coordinated work of hundreds of banks, ATMs, armored vehicles, thousands of employees whose work is directed only to the delivery of the paper to the point of destination. Infrastructure for the redistribution of cash is estimated in the billions of dollars. However, she does absolutely nothing but deliver dollars in the wallets of every American citizen. Only in the US circulation of the dollar serves 6,000 banks.
A Significant part of the turnover of the national currency passes through financial institutions that provide services for rapid processing of cash and non-cash remittances. JPMorgan, Visa and MasterCard for some reason, always excludes the costs of Fiat currency.
As reported , at the moment in the world there may be about 30,000 banks. Only their equipment consumes for 100 terrawatt-hours per year. While not taken into account the costs of transportation and security of the notes.
How much energy consumes Bitcoin
According now the Bitcoin network consumes about 70 terrawatt-hours in one year. But to calculate the consumption of the global banking system is practically impossible. You can not even accurately determine the number of financial institutions that take part in the circulation of world currencies.
A More accurate picture can be obtained from the comparison of the resources required per transaction. For example, VISA is committed of 111.2 billion transactions in 2017. The company consumes electricity equal to seventeen thousand average homes. Total – the average cost of a hundred thousand transactions – 169 kW/h just For a single transaction in the Bitcoin network you need to spend a little more than 1,000 kWh.
Figures may seem very impressive, especially in comparison with the energy consumption of some countries of the world. The cost of Bitcoin to cover half of the costs of the Dutch electricity. But on a global scale cryptocurrency is a mere 0.31 per cent of the world's electricity consumption.
theSolution
A Member of the ConsenSys John Lilik said that the price of every transaction of Bitcoin is unreasonably high and the problem of the large consumption of electricity should be resolved immediately. In the long term, cryptocurrency will not be able to handle that number of transactions, which now makes the same JPMorgan.
The Fee for each transfer of cryptocurrency is too high. Data centers and banks use quite different algorithms for processing non-cash payments, so the crypt until they is no competition. We should think over the problem of efficient use of energy, otherwise the system based on Proof-of-Work will no longer work.
Proof-of-Work was the first algorithm that was able to survive for almost ten years. However, PoW is not the only way to ensure consensus in bitcoin. The problem with a large consumption of electric power can solve global transition to an improved version of PoS, do not require tons of computing hardware high power.
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