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Bitcoin: The Economics are Unsustainable
While electronic currencies like Bitcoin gain popularity and recognition, one aspect of Bitcoin you may not know about is how expensive it is. With Bitcoin you don’t have the expense of needing to print bills and mint coins, but there are a lot of electrons being pushed to keep currencies like Bitcoin functional.
In fact, the amount of electricity that is being used to power the Bitcoin phenomenon is amazing. It is estimated that a single Bitcoin transaction requires more than 3000 times the energy needed to power a credit card transaction. A single Bitcoin transaction burns as much as 236 kWh of electricity, enough to power 8 homes for one day, or enough to charge a Tesla Model S car enough to drive 300 miles. Bitcoin is consuming about .12 percent of the total world consumption of electricity. At the current growth of Bitcoin, energy consumption for the currency is expected to equal the energy consumption for all of Denmark by 2020.
Christopher Malmo, Communications Officer at BC Financial Institutions Commission (FICOM), wrote that “adopting Bitcoin as a major currency anytime in the next few decades would just exacerbate anthropogenic climate change by needlessly increasing electricity consumption until it’s too late.”
Peter Kelly-Detwiler, co-founder of Northbridge Energy Partners, wrote in Forbes that “if no changes are made to the system, the viability of the currency itself might be challenged because the seignorage (defined as the difference between the face value of money and what it cost to make it) could be minimal or negative. In other words, the marginal electricity costs could outstrip the value of the newly minted bitcoin.”
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[…] couple of weeks back I posted the article “Bitcoin: The Economics are Unsustainable.” Maybe now that a single Bitcoin trades in the range of $15-20,000 that argument holds […]
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[…] Bitcoin consumes a quarter of one percent of the world’s electricity, according to a new report by CBECI (Cambridge Bitcoin Electricity Consumption Index). When compared to countries use of electricity, Bitcoin ranks at 40, consuming more electricity than countries like Switzerland. The results of the report are consistent with the information reported on the Formek blog in late 2017. […]