Cryptocurrencies vs precious metals – which are more energy-intensive to mine?
At first glance, you might initially think that cryptocurrencies and precious metals have little, if anything, in common. However, to the contrary, the two can be sourced in the same basic way: through mining. “Mining” has a broad definition here, but “energy consumption” doesn’t. The journal Nature Sustainability has published new research revealing that cryptocurrency mining expends significantly more energy compared to the mining of natural resources such as physical gold and silver. All of this has worrying implications for a planet already ecologically under pressure.
Number-crunching that provokes much thought
As reported by the United States Gold Bureau, researchers based in Cincinnati, Ohio, spent two-and-a-half years assessing the energy intensity of Bitcoin, Ethereum, Monero and Litecoin production.
From their research, they estimated that, on average, the energy consumption necessary for mining $1U worth of cryptocurrency reached – in megajoules (MJ) – 17 for Bitcoin, 7 for Ethereum and Litecoin and 14 for Monero.
These numbers are noticeably higher than those for mining copper, gold, platinum and rare earth oxides. The same researchers found that the corresponding, respective figures for these resources were roughly 4, 5, 7 and 9 MJ – even when, again, just $1 worth was produced.
Of the resources studied by these researchers, only aluminum proved less favorable for the planet than the cryptocurrencies. Producing $1 worth of aluminum spent 122 MJ of energy.
Blockchain: another eco-unfriendly ingredient
Cryptocurrency “miners” record their transactions on what is known as a “blockchain”. This term refers to a public ledger with which cryptocurrency transactions initiated around the world are accurately verified, with the miners making the blockchain as they compete with each other.
For what are these miners competing? A single, huge “jackpot” of crypto coins. Each blockchain can indeed have only one “winner”, but each “competition” can also be over in just 10 minutes as the miners rush to authenticate a sufficient number of transactions for ultimate victory.
Those miners can be attracted to a highly tempting carrot. The winner of such a competition on a Bitcoin blockchain at the start of 2018, for example, would have taken over $100,000 in winnings. However, coding a winning formula very much relies on a “trial and error” approach.
In fact, miners are required to spend each second executing tons of trials before they reach an answer. As a miner’s likelihood of winning a particular round increases with the number of trials that they perform, the miner is obviously incentivized to keep initiating new trials.
None of this bodes well for the wider environment. Large operations have opened as a means of fostering a competitive spirit in cryptocurrency mining. Especially worryingly, many miners have attempted to utilize cheap, coal-sourced energy in a bid to streamline their expenditure.
While such use of coal power could further push up global CO2 levels, there remain some sources of comfort. Some currencies have investigated less energy-intensive mining methods, while some operations could switch to renewable energy. Following cryptocurrency investment news at BTCNN could help you keep track of such developments.