As you already know that bitcoin is purely digital, so there’s no physical digging in it. And in a world of virtual currency, such creation is known as mining. However, the computer power needs a lot of electricity to create digital tokens.
According to Alex de Vries (an economist who tracks energy use in the industry), each digital token consumes energy, equivalent to an average American household burns in two years.
If we talk about the total number of computers that are plugged into bitcoin network, then the energy consumed by the network is equivalent to the energy of a medium-size country. The network that supports the second most valuable virtual currency, Ethereum, also consumes energy in a hefty amount.
Bitcoin and Ethereum are consuming so much energy that now it has become a part of a debate among some people. Since the energy consumption of these systems has risen, the prices of these virtual currencies have also gotten very high.
Vitalik Buterin (the creator of Ethereum), is trying to find out ways so the tokens can be created without requiring that much energy. He said that he’d feel unhappy if his main contribution to the world was adding Cyprus’s worth of electricity consumption to the global warming.
According to Peter Van Valkenburgh (director of research at Coin Centre), such electricity usage is really important. This argument has its essentials in the complex systems that create tokens like Bitcoin and Ether, the currency on the Ethereum network, and other new virtual currencies.
The enticement of new bitcoins is encouraging people to use fast computers and lots of electricity in order to find the right answer and to unlock new bitcoins that are distributed every 10 minutes. The process was well-defined by the original Bitcoin software, which was released in 2009.
At this time, the 12.5 bitcoins that are being distributed every 10 minutes are worth about $145,000 and people are willing to invest in it, which shows why there are huge server farms around the world that are devoted to bitcoin mining.
This process is essential for Bitcoin’s existence, as all the computers are serving as accountants for the Bitcoin network. No one can fudge the records and dominate the accounting as the mining race is meant to be really hard. According to Satoshi Nakamoto (the creator of virtual currency), the system was designed to thwart greedy attackers who might try to change the records.
Because of mining and accounting rules, the attackers have been kept away and the network is still safely going on. However, there’s been a disagreement over the original value of bitcoin and the network that supports it.
Marc Bevand (a miner and analyst) wrote in his blog that “labelling bitcoin mining as a waste is a failure to look at the bigger picture”. Although some people who are interested in all that innovation are anxious about the massive use of electricity. The concern about the use of electricity has become a subject of debate among many, however, other virtual currencies like Stellar and Ripple that were created after the Bitcoin don’t require much electricity.
The new mining process has been proposed by Mr Buterin for Ethereum. This process has been already used by some other smaller cryptocurrencies. New coins are distributed to only those people who are able to prove their ownership of existing coins. The current method totally relies on computational power and it just needs lots of computers which can play an important part in the computational race.
According to Mr Van Valkenburgh from the Coin Centre, if you want strong security at the moment, then you need proof of work.
Photo Credit : Mashable