Decrypt: Cryptocurrency on an energy guzzling power trip

New Delhi

Even as the adoption of cryptocur-rency gains momentum, the sky-rocketing cost of energy  required  to  maintain  such  networks  has  emerged  as  a  major  point  of  concern. To earn cryptocurrencies and ensure  a  stable  reservoir  of  coins  on  the  network,  miners  are  required  to  solve  cryptographic  equations  using  high-end computers. The energy intensive process of cryptomining  involves the verification of data blocks.  These  transaction  records  are  in-turn added to a public ledger using blockchain technology.

Consider this: the process of mining Bitcoin  to  spend  or  trade  consumes  around 91 terawatt hours of electricity annually, which is more than the quantum used by Finland, a nation of about  5.5  million.  That  usage,  which  amounts  to  half-a-per  cent  of  all  the  global electricity consumed, has risen ten-fold in just the past five years. The Bitcoin  network  uses  about  the  same  amount  of  electricity  annually  as  the  state of Washington. It’s over a third of what residential cooling in the US uses up and over seven times as much electricity  as  all  of  Google’s  global  operations.

Cryptocurrency networks require thousands of expensive hardware components to be housed in massive ware-houses  with  enough  cooling  power  to  keep  the constantly  running  machinery from overheating. That’s why mining now happens in giant data centres owned by companies or groups of people. In fact, operations have consolidated to an extent where only seven mining groups own nearly 80 pc of all computing power on the network. In India, the cost of power consumption for crypto mining ranges from Rs 30,000 to Rs  50,000  a  month.  A  cryptocurrency  mining infrastructure could involve a spend of Rs 50,000 to Rs 4 lakh  depending upon  the  complexity  and  use case requirements, as per a report.Mining happens all over the world, often  wherever  there’s  an  abundance  of  cheap  energy.  For  years,  Bitcoin  mining was concentrated in China,  although recently, the country has started cracking down. Researchers at the University of Cambridge who have been tracking Bitcoin mining said  recently  that  China’s  share  of  global  Bitcoin  mining  had  fallen  to  46  pc  in  April  from  75  pc  in  late  2019.  Mean-while, the US’ share of mining grew to 16 pc from 4 pc during the same period. Crypto mining implies hardware piling up, too. Alex de Vries, a Parisian economist,  estimates  that  every  year  and  a  half  or  so,  the  computational  power  of  mining  hardware  doubles,  making  older  machines  obsolete.  At  the start of 2021, Bitcoin alone was generating more e-waste than many  midsize countries, he says.

Thankfully, India has been  witnessing a rise in the number of con-scientious  miners.  Crypto  miners  in  the country are hoping to keep power bills  low  by  setting  up  solar  rooftop  power  units  and  battery  back-up  in  residential facilities. Some of them are even  considering  colder  countries  to  set up their crypto infrastructurewhich  would  bring  down  heat-related  issues and operating costs.