Nature International Journal of Science released a report claiming that the amount of energy needed to mine bitcoins, also commonly known as digital gold, is by far higher than what is required to extract physical gold.
The research paper, prepared by Max Krause of Oak Ridge Institute for Science & Education, and Thabet Tolaymat of Environmental Protection, revealed that the cost of mining $1 worth of bitcoin more than triples that of extracting $1 of gold as well as other precious metals.
From Jan. 1, 2016, to June 30, 2018, the researchers found that it took approximately 17 megajoules to mine $1 worth of bitcoin BTCUSD, -0.78% and around seven to fourteen other common cryptocurrencies, including Litecoin LTCUSD, -1.61% and Ether, ETHUSD, -1.91%.
“In comparison, mining of aluminum, copper, gold, platinum, and rare earth oxides took up 122, 4, 5, 7 and 9 (megajoules) to generate $1 respectively. This shows that (without aluminum) mining cryptocurrencies used up more energy than mining minerals to produce an equal market value,” they wrote.
What’s more, the study clarified that these approximations are not inclusive of all factors like; the maintenance costs; infrastructure costs and the cost for cooling down equipment used in mining crypto.
The Cost of Mining Cryptocurrencies Vs. Precious Metals
The increase in the cost of mining is due to the rising hash rates which refer to a measure of the miner’s performance. A higher hash rate means a computer is more likely to solve the mathematical puzzle needed to generate cryptocurrency, but this also comes at an extra amount of energy and cost.
There is also the question of the effect of mining bitcoin on the environment. A new research by the University of Hawaii found out that the electricity requirements of crypto-mining could emit enough CO2 wastes to raise world temperatures by 2ºC by the year 2023. The Bitcoin Energy Consumption Index reported that bitcoin mining utilizes about as much energy as the whole of Austria does as a nation.
But crypto isn’t going anywhere any soon. More and more arms are joining the mine for bitcoin and researchers are now panicking over increasing energy consumption rates. “Though the market value of the coins is quite unstable, the hash rates for three of the four primary cryptocurrencies consistently gone up, signifying that energy needs may continue to increase,” they wrote.
The experts also insisted that the data should be reviewed at the country-specific level, stating that noting cryptocurrency mining in China produces four times more CO2 compared to the one in Canada
Bitcoin merchant account holders and users were shocked to learn how costly mining their favorite currency is. Hopefully, market experts will look for ways to cut the cost of crypto-mining.
Author Bio: Electronic payments expert Blair Thomas is the co-founder of high-risk payment processing company eMerchantBroker. He’s just as passionate about his business as he is with traveling and spending time with his dog Cooper.