Bitcoin uses a significant amount of energy to conduct mining. In fact, the amount of energy consumed for electricity is similar to all that the nation of Denmark uses. The question has become, is it a waste of electricity? Bitcoin uses energy that directly converts to money. Can any other industry say that of their energy consumption?
Groups Opposing Bitcoin Due to Waste of Electricity
There are two dominant groups of people that have loud opposition to bitcoin. It isn’t necessarily that they are against the decentralization of currency, but they look at the drain on resources and question how long cryptocurrency will be around for. It’s important to look at each of their views when answering the question of whether bitcoin is a waste of electricity or not.
The Environmentally Conscious
Any time that there is excessive use of electricity, the environmentally-conscious will step in. Eco-activists are seeking to reduce power consumption around the globe, not contribute to it. A significant amount of electricity produced in today’s day and age are using unstable methods. However, eco-activists are also focused on reducing electrical consumption – and their campaigns target bitcoin mining as a way to control climate change.
Although they may have a point in terms of how much Bitcoin is using for electricity, they also forget that there are other methods of producing electricity that is considerably safer for the environment. Some colocation facilities are using solar as a way to supply their mining operations. This shuts down the argument of those who believe that bitcoin is wasting electricity.
Countless economists question the overall benefits of Bitcoin and wonder whether it has any actual value outside of the community of those who use cryptocurrency. In recent years there are a number of economists who have been outspoken against Bitcoin. This includes Joseph Stiglitz who is a professor at Columbia University while also winning the Nobel Prize for economic studies. Nouriel Roubini of New York University is also one of the more skeptical economists as also earned the nickname of Dr. doom. Finally, there is Kenneth Rogoff, a former IMF chief economist.
Many of the economists believe that Bitcoin will fail once governments choose to fight back. They believe that cryptocurrency is allowing criminals to launder money and perform various other fraudulent practices. Additionally, there is the question of liability within mainstream payment systems. Roubini suggests that bitcoin is not accepted in a mainstream capacity even though it has been available for years. Further, he believes that because of the volatility, it cannot be a stable store of value.
Meanwhile, Rogoff’s reasoning actually works against him to show why bitcoin will continue to thrive. Rogoff, now a professor at Harvard, says, “People in power will move to regulate anonymous transactions. That you can be sure of.” However, it is the decentralization of currency that is so attractive – and people will fight to make sure that it stays decentralized.
8 Reasons Why Bitcoin is Not a Waste
We’ve identified eight reasons why Bitcoin is not a waste of electricity. When you see all that it is capable of, it allows you to defend the argument of how Bitcoin is most certainly not a waste.
#1: Bitcoin Succeeds Where Cash Fails
When you take a good look at history, prosperity depends on sound money. The supply of fiat currency has been seen throughout the Roman Empire all the way through today’s modern banks. When cash is no longer trusted, it becomes useless.
#2: Mining Holds Promise and Profit
In order for mining to be profitable, it requires low electrical costs. It makes it easier to compete head-to-head with other miners. When you know more about ASIC technology and hardware, it allows you to focus on the operations. Miners who are able to solve more blocks are able to be more profitable. The promise comes from knowing how to operate profitably – and it’s not always about the latest and greatest technology. Those who operate in cool locations or who are using hydro-electric power find themselves in good positions.
#3: Bitcoin Stabilizes the Economy
Anything capable of stabilizing the economy should be commended. Bitcoin is capable of preventing inflation. In a fiat system, there are corrupt rulers. Meanwhile, Bitcoin takes a legitimate approach. There is a constant flow of bitcoins and it is decentralized, keeping it out of control of the decision-making class.
#4: Bitcoin is a Better Framework than the Fiat System
If Bitcoin is capable of replacing ATMs, banks, installment administrations (credit processors like VISA and AMEX), the power is balanced. It ensures that the power that goes to those facilities for lighting and office hardware now goes to bitcoin.
Further, there are other assets that are eliminated in a Bitcoin framework:
- Office supplies
- Cash in an armored vehicle
- Paper and ink for printing currency
- Fuel for the travel of employees
- Resources to operate an office building
The list goes on and on for the expenses and assets needed in a fiat system that is simply not required for Bitcoin to operate.
#5: Mining is a Heat Generator
In a world where there is never enough heat, anything that generates heat is of interest. The machines that make mining possible generate warmth. Various server farms around the globe are learning how to reutilize the heat. IBM Switzerland, for example, has warmed an open swimming pool. Power tends to be the most advantageous way to produce heat, despite propane, wood, and oil being cheaper. With mining already in place using power, it ensures that the heat is not going to waste.
#6: IoT is Supported by Bitcoin Mining
The IoT (internet of things) is changing the world by attaching sensors to even the most mundane objects. It’s ensuring that more things can be connected to the internet to learn of usage and provide various reports that monitor the environment that a particular object is in.
With low-fueled mining gadgets hitting the market producing almost no profit, it is leading to the possibility of machine to machine installments. This is still an area that is being discovered, though it is intriguing to say the very least. When various devices become self-aware, they can provide complex reports to identify how they can be more eco-friendly – and that can also help to produce more profitability out of Bitcoin mining.
#7: Bitcoin is More than Mining
At first glance, Bitcoin is all about mining. The more mining is done, the more bitcoins are produced. However, it is so much more than that. Bitcoin is decentralized currency that is being used more prominently than ever before. Sidechains are being created to address cases that were once deemed unserviceable. Tokenized coins can also help to support ICOs of entrepreneurial ventures that launch regularly. Rather than choosing a coin that has no real value, they can be attached to Bitcoin for a higher level of security.
#8: Mining Becomes Increasingly More Efficient
What Bitcoin produces in energy now is not what it will be in 5 years or 10 years. Why? Mining is becoming more efficient. The systems used to process the complex computations are evolving. When Bitcoin first launched, people were using GPUs. Now, many are moving to ASICs. The reason is simple: efficiency.
ASIC mining architecture allows mining to operate more efficiently. It reduces the power required to mine and allows more blocks to be mined faster. While it’s a greater initial investment, most miners find that it is a more profitable solution overall. And, as technology continues to evolve, mining may become even more efficient as something ends up being better than ASIC.
Learn Even More About Bitcoin Efficiency
When you don’t want Bitcoin to be a drain on electricity and you want to prove just how beneficial it is to the world, contact us. At D-Central, we make sure to use sustainable energy sources for our Bitcoin mining operations.