Mining the Earth for Untraceable Wealth: On How Bitcoin Might Kill Us All
Bitcoin has been in the news a lot lately; maybe you first heard of it when you tried to get a fake ID, but do you actually know what Bitcoin is?
Bitcoin’s website defines a bitcoin as, “A consensus network that enables a new payment system and a completely digital money. It is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen.” It’s a currency that isn’t controlled by any form of centralized government; it’s backed entirely by its users. Recently, Bitcoin has boomed. In 2013 a singular coin was worth $12; at the beginning of 2017 it was worth less than $1,000; at the end of 2017, a single bitcoin is now worth over $15,000.
What makes bitcoins so practical, aside from the fact that they’re cheap and fast, is the currency’s incomparable privacy. It is impossible to know who holds a particular bitcoin address. This is what makes it so easy to perform illegal activities like get a fake ID.
Bitcoin also solves two of the main problems many people have with paper money. Cash is controlled by the government, which sets its own rules for supply, while Bitcoin is entirely decentralized, controlled by ‘miners’ around the world. Paper money is susceptible to inflation if the government prints out too much, but Bitcoin has set a cap on the total amount of bitcoins that can be produced, which checks inflation.
What seems to be going unnoticed amidst the Bitcoin boom is how much energy it eats up. While the Bitcoin name has worked its way into the mainstream, not many know how it is created. Regular, paper money is created at a government facility. This is not the case with Bitcoin, because no central government controls it. In fact, the creator of Bitcoin is entirely unknown, created pseudonymously under the name Satoshi Nakamoto. Aforementioned miners are tasked with solving problems and issued a certain number of bitcoins in exchange. The “problems” miners are tasked to solve aren’t questions like, “What is 2 + 2?” or, “What’s the derivative of 2x?” They are highly complicated problems only answerable through computers that require large amounts of processing power (hardware, energy, and time). Not only does this regulate how many bitcoins are in circulation, it also creates incentive for miners to continue. All miners do their work regulating the blockchain, which is a public ledger that records all bitcoin payments.
All this mining takes up incredible amounts of energy, and confronts us with the real problem of Bitcoin. As Grist’s Eric Holthaus reports, the total amount of computer power from mining is “100,000 times larger than the world’s 500 fastest supercomputers combined.” Even more concerning is each bitcoin transaction requires the same amount of energy to power nine homes in the U.S. for one day. Holthaus continues, “By July 2019, the bitcoin network will require more electricity than the entire United States currently uses. By February 2020, it will use as much electricity as the entire world does today.” But when it comes to money, historically, the world does not have a good track record of stopping. At a time in history in which we need to be using less energy more than ever, Bitcoin is pushing the world to do the exact opposite.
On the other hand, there are certainly solutions, and this might not be as pressing of a problem as it seems. A Bitcoin software update could potentially fix certain energy consumption problems. The numbers “digiconomist” uses are not necessarily exact. It is incredibly difficult to obtain information from all miners around the world, some of whom are incredibly secretive, so the site makes several assumptions about miners around the world that could alter the numbers slightly. Additionally, the consumption numbers are so high at the moment because the value of a bitcoin is on the rise, so there is greater incentive for miners to mine. The number of bitcoin transactions are not what consume so much energy; it’s the mining that requires so much power. In fact, there are other cryptocurrencies that have more transactions yet use less energy. Bitcoin’s software is simply behind.
Nevertheless, Bitcoin’s problems are not going away anytime soon. People are still mining and investing at very high rates, which will continue to consume large amounts of energy. Additionally, the unfortunate part about Bitcoin being decentralized is that for a change to occur, an upgrade needs a consensus among bitcoin users. This makes it extremely difficult for Bitcoin to solve its problems. Regardless of whether a change is to come, every day miners create such large amounts of the currency, they contribute to the destruction of the Earth. Whether you purchase bitcoins for illegal activities, investments, or you have never even heard of the cryptocurrency, it has the potential to deeply affect the world.