How bitcoins became the new climate change baddies
by Jackie A
3 months ago
It's a bit warm today for gibberish - WHAT does that mean?
It means that "mining" bitcoins 24/7 on hundreds of thousands of computers takes gargantuan amounts of electricity - a report last month estimated it to be comparable to the carbon footprint of a small country like Sri Lanka or Ireland or Switzerland or a busy place like Kansas City in the US. This year, electricity use in Iceland's Bitcoin mining data centers is likely to exceed that of all of Iceland's homes. Gulp.
For a spot of data processing on a computer? Are you serious?
Deadly. Processing cryptocurrencies contribute to global carbon emissions because the complicated way blockchain technology works demands huge amounts of power. What's more, they use all this energy while processing fewer than 100 million financial transactions per year - while good old banks and traditional financial industries processes 500 billion transactions.
Wait. Wait. Wait. Just in case I've forgotten, remind me how blockchain works.
Ok for all you non-computer scientists - Blockchain was set up in 2008 as a way to trade bitcoin - a currency that gets rid of the middleman, eg banks. But you can use it for other trade too. It uses computers which all have the same data base - like a big ledger owned by everyone, peer to peer - and which grows as new sets of recordings, or 'blocks', are added to it. Here's the weird bit - transactions are verified with 'signatures' by a network of miners solving cryptographic puzzles - you need to guess a random number that solves an equation generated by the system. (Sorry, that was my best shot). The idea being that as long as enough people chipped in computing power to check the solution, nobody would be able to fake records or ...
Stop! My head. Why bother getting involved and landing an eye-watering electricity bi
Money. Miners are tasked with verifying transactions made by people who send or receive Bitcoin by using this puzzle hurdle that ensures no-one fraudulently edits the global record of all transactions. For this they are usually paid in bitcoins, currently worth about $11k a piece. But you can't do it at home on your PC or laptop anymore. These babies need super duper computers.
OK, so really simply - how do you become a bitcoin miner?
I'm not sure this is a career for you, but here goes. First you need to buy the best bitcoin mining hardware you can afford - (Application Specific Integrated Circuits, ASICs) - they cost several thousand dollars but mine bitcoins at lightning speeds. Then download some free bitcoin mining software. Join a bitcoin mining pool - strength in numbers - and set up a bitcoin Wallet. Watch the money flow in. Here's what the Chinese competition looks like. Harsh.
Wish I'd never asked - I'll stick to writing, thanks. Greener. Isn't anyone stopping this waste of CO2?
Slightly more than two-thirds of bitcoin mining happens in Asia, with most of the rest in Europe, North America and Venezuela (weirdly).
Iran recently seized 1,000 bitcoin mining machines after they noticed an unexpected national power spike of seven percent. More importantly China, the world's biggest polluter, is now looking to ban cryptocurrency mining - they consider it "a waste of resources and adding pollution." I mean - pot/black?
So will all this madness stop soon?
If they are not banned beforehand there are only 21 million bitcoins out there to be mined (don't ask - well ok - the supply was fixed to prevent them from being debased by tyrannical governments.) Moving quickly along, as we are on about 17.7m, there's not that many to go. Take a look at this great website that gives a real time update on how many are left. The race to get them will be bad for poor Mother Earth but it will soon be over. The next big thing in blockchain is IOTA - Internet of Things Applications - (srsly, can't they come up with more fun acronyms?) which might become the way we carry out business between internet-connected devices in the future. I mean, shoot me now...
Enough acronyms already. Give me something to make me feel better about this story won't you?
OK, here's a dose of schadenfreude. Lots of dozy folk who didn't really understand the technology (I mean duh!) actually lost their bitcoins. Poof! Can you imagine? Some say about three to four million bitcoins are lost. At today's value of about $11K (they jumped 20% last week - this is wild west country) that's a lot of cash. If only they could find that computer or password to get them back! Also much of this earth-damaging money has been stolen - around one million bitcoins. But stolen does not mean lost - they could be still circulating and may not even be in the hands of the original thieves. Shame.
Bitcoin was launched in 2009 and by Feb 2011 were worth a princely $1 each. Something else you should have bought way back then, including shares in Netflix and Domino Pizza. (Up 4,000% in ten years).