One of the more controversial aspects of cryptocurrencies is the issue of mining. From accusations of energy waste, to countries outright banning the practice altogether, there is always news regarding the issue.
Finding your way through such information and coming to a solid conclusion can be difficult with bias on both sides of the argument. Is cryptocurrency mining wasting precious resources? Has China once more banned Bitcoin mining? Let us take a look at some of the FUD and facts surrounding cryptocurrency mining.
Bitcoin mining consumes too much electricity!
This is the most common argument against Bitcoin. During the meteoric price rise, news outlets consistently pushed the narrative that Bitcoin mining was consuming enough electricity to power a small country. With issues of global warming at the forefront of discourse throughout the western world, was it right for society to spend this much energy on a cryptocurrency?
Alex De Vries’ research found that Bitcoin was using 2.55 gigawatts of electricity, equivalent to Ireland at the time. As the Bitcoin network grows, more and more energy is needed to help keep it secure.
For supporters of Bitcoin, their rebuttal is that the figures are misleading. They claim that energy usage is what provides Bitcoin its value. If it was easy to mine Bitcoin then Bitcoin wouldn’t be worth anything at all. The value derived from mining is what keeps the network working.
Another common argument is when the cost of Bitcoin mining is compared to other industries. Cars, gold mining, and industrialising nations all produce vast amounts of pollution into our atmosphere and many Bitcoiner’s appear aggrieved that these are not criticised.
It is true that, when compared to China’s energy usage as a nation, Bitcoin’s consumption is miniscule. Whether it is fair to compare one of the largest nations in the world’s energy usage to Bitcoin’s is another matter though.
Bitcoin mining also takes place in many countries that rely heavily on renewable energy. Iceland, for example, is a mining hub due to its cheap and plentiful geothermal electricity.
Some Bitcoin fans have suggested that the issues surrounding Bitcoin mining could, in theory, push the world to cleaner sources of energy as a whole.
Is cryptocurrency mining worth it?
This question depends on how you view cryptocurrencies as a whole. If you are a fan of Bitcoin and its aims then Bitcoin mining is definitely a necessary evil. However, if you view cryptocurrencies as a mere joke then mining them is definitely a waste of energy.
There is some middle ground though. Many people view the Proof-of-Work hashing algorithm that runs Bitcoin as an inefficient mining algorithm. They argue that, in the future, new cryptocurrencies with better alternatives will appear such as Proof-of-Stake. Yet whilst Proof-of-Stake might be more energy efficient it will still have its own downfalls.
For now, it appears unlikely that any other cryptocurrency is going to overtake Bitcoin and that means that Proof-of-Work and mining will continue to harvest electricity.
China bans Bitcoin!
This headline has appeared throughout the lifespan of Bitcoin. So much so that it has become a meme within the community. The laws surrounding Bitcoin in China still appear hazy, despite there being a large appetite for Bitcoin in the second largest economy in the world.
China banning Bitcoin mining might not be the worst thing that would ever happen though. China itself is a huge energy user, but their energy mainly relies on fossil fuels. This means that the nation is one of the largest polluters in the world.
Should China ever actually ban Bitcoin mining then there would still be numerous other nations that would fancy taking up the mantle, most likely countries that rely much more on renewable energy. China is not the be all and end all of Bitcoin.
Cryptocurrency mining is generally energy intensive. However, the precise amounts of energy consumed and where these energy sources come from is harder to ascertain.
With public discourse in the western world highly focused on issues surrounding global warming, Bitcoin and other cryptocurrencies will have to argue long and hard to show its worth.
Further research and studies is needed from experts in the future. Bitcoiners will need to provide more articulate arguments than just “global warming is a hoax” to win this argument.
To find out more about mining, read these dedicated guides.