Mining cryptocurrency worth a dollar is three times as expensive as digging out a gold nugget worth the same amount of money.
The energy needed to rive farms of mining servers has outstripped the total energy consumed by entire nations and the global environmental impact of the hunt for wealth from digital currency is yet to be revealed, say researchers.
In the decade since Bitcoin came to the world, leading a global frenzy to mine digital coins by tasking banks of computers to solve complicated mathematical problems, the value of the top 100 cryptocurrencies mushroomed from zero to more than $200 billion.
Max Krause, a researcher at the Oak Ridge Institute for Science and Education, who is one of the authors of the new study, said: ““We now have an entirely new industry that is consuming more energy per year than many countries.”
He explained that in 2015, Denmark consumer 31.4 billion kilowatt hours of electricity, but by July 1, 2018, global Bitcoin mining had swallowed 30.1 billion kilowatt hours in six months.
“We wanted to spread awareness about the potential environmental costs for mining cryptocurrencies,” Krause said. “Just because you are creating a digital product, that doesn’t mean it does not consume a large amount of energy to make it.”
Keeping an eye on the exchange rate between Bitcoin and the US dollar is vital.
The magic number is around $6,250 – $6,500 a Bitcoin. Below that figure, mining becomes unprofitable due to the cost of the mining rig and the electricity the farms of hundreds of servers can consume.
Is mining worth it?
The study calculated the baseline energy cost (measured in megajoules or MJ) to produce $1 of the top four cryptocurrencies – Bitcoin (17MJ), Ethereum (7MJ), Litecoin (7MJ) and Monero (24MJ) – over a 30-months ending June 2018.
In comparison, mining $1 of gold (5MJ), platinum (7MJ) or copper (4MJ) was around three times less. Only aluminium (122MJ) was more energy intensive.
“The comparison is made to quantify and contextualise the decentralised energy demand that the mining of these cryptocurrencies requires,” says the report. “We want to encourage debate on whether these energy demands are both sustainable and appropriate given the product that results from relatively similar energy consumption when normalised by market price.”