THE growth of bitcoin is fuelling speculation and debate about the environmental impact of the energy needed to power the virtual currency in the era of climate change.
Bitcoin is the most popular virtual currency in the world, and it has fluctuated significantly in value over the past year. It was created in 2009 as a new way of paying for things that would not be subject to central banks that are capable of devaluing currency.
The sustainability concerns about bitcoin, voiced by economists and environmentalists, stem from the process of “mining” that is central to its existence.
The “miners” use computers to make complex calculations that verify transactions in bitcoins.
This uses a tremendous amount of energy via computers and server farms all over the world, which has given rise to concerns about the amount of fossil fuel-dependent electricity used to power the computers.
Some estimates say bitcoin’s energy impact is more than that of a small country.
Bitcoin is a kind of digital money that isn’t tied to a bank or a government, and its value rose swiftly in the second half of 2017 before falling early this year. It’s volatile.
The value of one bitcoin was about $16,500 in late December 2017, compared with about $1,000 in March 2017, and then it dipped to about $7,700 in the first week of February this year.
A bitcoin itself is essentially a line of computer code.
It’s signed digitally when it goes from one owner to another.
Bitcoin can’t exist without computers, which can’t exist without a source of electricity. And the number of computers and the energy needed to power them is rising.
The growing value of bitcoin is directly tied to the amount of energy it uses. The miners unlock bitcoins by solving complex, unique puzzles.
As the value of bitcoin goes up, the puzzles become increasingly more difficult, and it requires more computer power to solve them.
Some estimates say more than 60 per cent of the processing power used to mine bitcoin is in China, where it relies heavily on the burning of coal.
The Chinese government revealed plans in January to shut down bitcoin mining, partly because of concerns about energy consumption.