Bitcoin bubble could swallow world’s energy production

A network that underpins the virtual bitcoin cryptocurrency is projected to consume all of the world’s current energy production in order to support itself within three years, according to estimates by Digiconomist.

The amount of power necessary to support bitcoin has increased significantly as its price has surged to record levels. One bitcoin is currently worth around AUD$21,914 – a twentyfold increase since the start of the year.

Bitcoin mining – the process of generating new units of the currency by confirming bitcoin transactions on an online ledger called the blockchain – requires high-powered computers to solve complex mathematical puzzles used in the mining process. These problems are designed to become more complicated as more computers join the cryptocurrency’s network.

So, how much energy does the network currently require to mine bitcoin? Digiconomist puts the usage on a par with Denmark, consuming 33TW of electricity annually ­– and research suggests it’s getting hungrier by the day.

The bitcoin network’s energy consumption has increased by 25 per cent in the last month. If projections prove accurate, the network could consume as much energy as the US by 2019 and as much energy as the entire world by the end of 2020.

“As mining can provide a solid stream of revenue, people are very willing to run power-hungry machines to get a piece of it. Over the years, this has caused the total energy consumption of the bitcoin network to grow to epic proportions,” Digiconomist said.