The energy footprint of bitcoin mining is beginning to outstrip the Republic's entire energy consumption, according to research from Maynooth University.
Bitcoin is one of the first cryptocurrencies, which are digital currencies that use cryptography to control their creation and management, instead of relying on central banks.
Bitcoin mining is the process by which transactions are verified and added to a public ledger, also known as the blockchain. It is also the means through which new bitcoin are released.
There are now approximately 16,800,000 bitcoins in circulation, according to cryptocurrency experts Coindesk. This number has been accompanied by significant growth in bitcoin mining activity since the cryptocurrency was released into the market in 2009.
Having reached record value highs in 2017, bitcoin has experienced a high level of volatility in recent weeks. In December 2017, a unit of bitcoin was worth over $19,000. By January, a unit was valued at just over $17,000, which has since fallen to below $6,000.
Notwithstanding this fall in value, bitcoin activity has been growing. In the four years following 2009, there were 50 bitcoins created in total. Today, 12.5 bitcoins are generated every 10 minutes.
The research by Maynooth University found that its energy consumption has also ballooned, while the technology to produce it has relatively lagged in terms of efficiency.
Research by Dr David Malone and Karl O’Dwyer of the Maynooth University Hamilton Institute examined the energy consumption of bitcoin mining.
They estimated that in 2014 it could use anywhere between 0.01 gigawatts all the way up to 10 gigawatts, while Ireland’s energy consumption varied between 2.5 to five gigawatts depending on the time of day.
To put this into perspective, two gigawatts of energy is the equivalent of one second of running 1.6 million kettles all at the same time or leaving 700,000 immersion heaters on full blast.
Using two gigawatts for an hour is the same as using two million units of electricity, and would cost about €300,000 per hour to run at consumer prices.
Dr Malone said this raises the question as to “whether current levels of bitcoin mining are sustainable, and have any long-term worth to investors and the global economy – especially as bitcoin mining energy usage is now a minimum of two gigawatts, and when overheads such as air conditioning and cooling systems for bitcoin mining facilities are taken into account, this easily becomes 3.5 gigawatts or more.”
Making bitcoin involves guessing the solutions to equations. In technical terms, each guess is called a hash, and the estimate for how fast the whole network is guessing is called the ‘hashrate’ (TH).
“When we originally did our study in 2014, the hashrate was about 300,000TH per second and at the start of 2017 it was more like 2,000,000TH per second - an increase of six to seven times,” said Dr Malone.
“In the same period, the best hardware got about five times as energy efficient so a significant fraction of the increase of the increase in hash rate could have been absorbed.
“Now, despite bitcoin’s recent fall in value, the hashrate is over 23,000,000TH per second and there doesn’t seem to have been big hardware advances in efficiency in the last year or so.
“This would give an estimate of energy consumption that starts at over two gigawatts, with overheads for bitcoin mining operations easily adding another 1.5 gigawatts to this.
“When we add the overhead energy consumption, for things like lights for bitcoin mining operations, we can see the energy footprint start to outstrip the usage of entire countries like Ireland.”