When crypto mining operations are set up in a new location, their owners often negotiate with local utilities for predetermined electricity rates. “There hasn’t been any time in the history of bitcoin where increasing machine efficiency led to less energy consumption” -Alex de Vries Today, companies invest millions in setting up giant mining operations outfitted with rack upon rack of specialized bitcoin-mining computers that consume huge amounts of energy. But as bitcoin grew in popularity and more people got into the mining game, the computing power (or the “work”) needed to find the right numerical sequence grew as well.
In the early days of bitcoin, the math equations were less complicated and you could mine bitcoin fairly quickly using just a home computer.
In computing-speak, this is called proof of work: The more work you put in, the more bitcoin you get out. As more people (i.e., computers) try to guess that number, the protocol adjusts itself to make the number harder to guess, so more computing power is needed to make more guesses quickly. In order to mine bitcoin, you need to guess what that solution is.
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“There hasn’t been any time in the history of bitcoin where increasing machine efficiency led to less energy consumption,” said Alex de Vries, founder of the website Digiconomist, which tracks the sustainability of cryptocurrencies.īitcoin, along with many other cryptocurrencies, works on a simple concept: Every 10 minutes, the bitcoin protocol - essentially, the code underlying bitcoin - generates a math equation with a numerical solution. The reason, experts say, is due to a fundamental paradox at the heart of how bitcoin mining works - and that paradox could have far-reaching implications for the climate crisis.
While Intel may be one of the biggest chipmakers getting into the bitcoin game, other companies have for years been working on making their chips more energy efficient without any resulting drop in the energy used by mining operations. According to Intel, the Bonanza Mine chip would allow bitcoin miners to get the same amount of bitcoin for less energy. That problem is partly why Intel, one of the largest chipmakers in the world by revenue, recently unveiled Bonanza Mine, its first computing chip specially designed for mining bitcoin in an energy-efficient way. One oft-cited example is that it uses more energy than the annual consumption in countries like Finland or Denmark - and that’s concerning in a world that’s already on track to blow past its climate goals, thanks in large part to fossil fuel emissions from energy consumption. Wherever you stand on bitcoin, though, one fact is undeniable: Bitcoin is extremely energy-hungry. Some countries have embraced bitcoin wholeheartedly, with El Salvador saying the cryptocurrency will give more citizens access to banking others have outright banned it from their borders, citing the risk of criminal activity. It’s the cryptocurrency that started it all, the progenitor of a thousand memes, a thousand more questions, multiple dubious salary decisions, and an entire industry built around its promise of a financial revolution. This story is part of Recode by Vox’s Tech Support series, which explores solutions for our warming world.
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