Cryptocurrencies are becoming increasingly popular. This week, the value of bitcoin reached a record high of around 53,000 euros. Mining, or mining, can also be a good source of income. But there is a downside to this: it consumes a lot of electricity. In some places this leads to electricity problems.
Transactions with bitcoins are checked by miners on the basis of a mathematical puzzle that requires a lot of computation from computers. That process is called mining. This makes secure bitcoin transactions possible. The miner who finds the right solution first earns 6.25 bitcoins. Currently, that is converted around 330,000 euros.
In principle, anyone can mine. Depending on the digital currency, it can be done with your own computer or with computers that contain chips for faster and more efficient calculations. “You can only successfully mine bitcoins if you have special equipment,” says Harald Vrancken, associate professor at the Open University and Radboud University. “With a regular computer you have little chance. Compared to those special computers, the speed at which you can mine is like a snail compared to a Formula 1 racing car.”
And those special computers use a relatively large amount of power. Most of the total amount of power that goes into mining goes to bitcoins. “It is difficult to clarify exactly where mines are being mined. It is a global phenomenon, but at the same time it is a somewhat shady world. Not everyone likes it,” says Vranken.
What is mining and how much power does it cost?
Miners go to places where electricity is cheap. This is the case, for example, in places where hydroelectric power plants supply an overcapacity of electricity in the rainy season or where cheap coal is available and electricity is still generated in coal-fired power stations. This still happens in China and Russia, for example.
The computers are constantly solving sums and that consumes electricity. Sometimes so much that the local population has no electricity. There are therefore governments that prohibit mining.
An example of such a place is Abkhazia, a region separated from Georgia. Cheap electricity made the region, which has been struggling for years with political and economic instability, of interest to miners. Although many come from abroad – Russia for example – the local population is also actively mining.
However, the power network in Abkhazia was difficult to cope with. The power went out regularly. This led to dissatisfaction, partly because the population would then have no heating, wrote the Russian newspaper Novaya Gazeta. To solve the electricity problems, the government recently decided to ban mining. It had only been legal since last September.
“
There is, of course, a lot going on under the radar: crypto mining is not a regulated sector.
A ban has also been introduced in Inner Mongolia, an autonomous region in China. More than 8 percent of all bitcoins are mined there. However, last month it was announced that the region will close all mining activities before the end of April to reduce energy consumption.
“There are more reports of a crackdown, but this is the most serious so far,” said China correspondent Sjoerd den Daas. “It remains to be seen how this ban will be implemented and how they will be enforced. Of course a lot is happening under the radar: cryptomining is not a regulated sector. “
Den Daas doubts whether the ban will actually lead to less mining and therefore lower power consumption. “It is still too early to say anything about that. Some will undoubtedly stop, others will be able to continue to operate, whether or not in other places in the country.”
Incidentally, Iran, another popular place in this area, is also facing electricity problems. Last January, the government said that this is due to the many miners in the country. They, in turn, say that they are not responsible for that.
More and more mining
Now that the bitcoin price is rising so fast, this also has an effect on power consumption. “There is more to be earned and it will be attractive to mine,” says Vrancken. “But that also means that more calculations are done and that costs more power. And the more people mine, the faster the mathematical puzzles are solved. That is why the difficulty level is increased every two weeks.”
Vrancken is concerned about the long-term consequences of intensive power consumption. “At the moment, approximately 1 percent of global power consumption is consumed cryptomining. If you look at the climate goals and the CO2 reduction that people are striving for, you have to ask yourself whether it is appropriate to do this on a global scale. It is true that alternative methods of mining are being developed that use much less power, but for many people money still comes first. “