Editor’s Note: In May, the “cryptocurrency world” attracted a lot of attention, and on May 18, the Internet Finance Association of China and other three major associations issued a notice stating that the exchange of legal tender and virtual currency, as well as the exchange of virtual currency, violates relevant laws and regulations and is suspected of being a crime. On May 21, the Financial Commission of the State Council made a strong statement, once again clarifying the financial regulators’ attitude towards strict regulation of bitcoin: “Crack down on bitcoin mining and trading, and resolutely prevent individual risks from being passed on to the social sector”.
Where does the “fever” of coin speculation come from? What is the chaos in the “cryptocurrency world”? How does “mining” consume energy? How to develop blockchain healthily? With these questions, People’s Daily Online “Strong Observation” column launched a series of “Four Questions on Bitcoin”, please pay attention.
“Without any policy intervention, the annual energy consumption of China’s bitcoin blockchain will peak at 296.59 TWh in 2024, generating 130.5 million metric tons of carbon emissions.” On April 6, the internationally recognized journal Nature Communications published an article titled Policy assessments for the carbon emission flows and sustainability of Bitcoin blockchain operation in China (Policy assessments for the sustainability of Bitcoin operations and carbon emissions).
Research paper entitled “Operational sustainability and carbon policy assessment of bitcoin”. Source: Nature Communications
Wang Shouyang, director of the Predictive Science Research Center of the Chinese Academy of Sciences, said in an interview with People’s Daily Online’s “Strong Observation” section that the research team developed the Bitcoin Blockchain Carbon Emission Model-BBCE (including the Bitcoin Blockchain Mining and Trading Subsystem, the Energy Consumption Subsystem, and the Carbon Emission Subsystem). ). The study concluded that Bitcoin not only consumes a lot of electricity, but also contributes to CO2 emissions. From an environmental point of view, it is necessary to combat reckless “mining”.
Bitcoin blockchain carbon emissions model-BBCE . Source: Nature Communications
How coins are mined
Before answering this question, we need to start with how “coins” are mined. “Bitcoin is a virtual cryptocurrency that is generated by a large number of calculations using a specific algorithm, a process also known as ‘mining’. Wang Shouyang told reporters.
Wang Shouyang said that in recent years, bitcoin has attracted more and more “miners” to “mine” because of its high profits. Mining” requires the use of computers as “mining machines” to perform specific algorithms to calculate and compete for the right to broadcast blocks. The miner who gets the right to broadcast the block receives bitcoins as a reward. During the computation process, the Bitcoin network consumes a large amount of electrical energy and computing power.
“The same energy and arithmetic power should be able to generate greater economic and social value if placed in the construction of urban edge data centers and the basic supply of smart cities, smart transportation and other industries.” Wang Shouyang said.
Zhang Jun, a professor at Wuhan University’s School of Electricity and Automation, pointed out that Bitcoin’s algorithm is solving a hash function, which means that if you give a string of code, it will generate another string of random code. All computers in the Internet can look for this code, and whoever finds it will generate a block, and then get a bitcoin, a process often referred to as “mining”.
“Every 10 minutes, the Bitcoin network generates a mathematical problem that is given to the computers involved in processing the blocks (i.e., the ‘miners’) to solve. The first ‘miner’ to solve the answer will be rewarded with a certain number of bitcoins.” As an example, Zhang Jun said that if 1 computer and 100 computers “mine” each block, and the former counts one random code at a time, and the latter counts 100 random codes at a time, the more bitcoins are mined in parallel, the more bitcoins are mined. In order to make profits, speculators will buy a large number of mining machines to carry out large-scale “mining”, which will naturally produce a huge waste of energy.
In fact, the high energy consumption of bitcoin has caught the attention of countries around the world, not just China. The European Central Bank has said that crypto assets have an “alarmingly high carbon footprint”. Bill Gates previously said during a guest appearance on the social media platform Clubhouse that Bitcoin consumes more electricity per transaction than any other payment method known to man.
“Mining” affects the realization of “carbon neutrality”
At the same time, the reporter also noted that while it is difficult to quantify the amount of electricity or energy used to “mine” a virtual coin, there are some research institutions that have tried to present the extent of energy consumption in aggregate.
According to the International Energy Agency (IEA), bitcoin “mining” consumed 50 to 70 megawatt-hours in 2019, roughly the same amount as a country the size of Switzerland. The real-time data from the Bitcoin Electricity Consumption Index is even more worrisome, with total bitcoin energy consumption between 43.89-482.43 terawatt-hours (TWh) as of May 17 BST, with the average tally being around 140.25 TWh, a figure that exceeds Sweden’s electricity consumption for all of 2019 (131.8 TWh).
More notably, some studies have also shown that “mining” not only generates a lot of energy, but may offset our efforts to work towards a “peak-carbon, carbon-neutral” process.
Shouyang Wang’s research team used the Bitcoin Blockchain Carbon Emissions Model to track carbon emissions flows from Bitcoin blockchain operations in China. Based on current bitcoin “mining” trends, they predict that the energy consumption of bitcoin blockchain operations will peak at about 297 trillion watt-hours in 2024, and will generate about 130.5 million metric tons of carbon emissions. This value exceeds the total annual greenhouse gas emissions of the Czech Republic, Qatar and other countries.
“Bitcoin is a ‘high carbon’ industry. This is clearly at odds with our goal of striving to achieve carbon peaking by 2030 and carbon neutrality by 2060.” Wang Shouyang said that mining in China generated 69 million tons of CO2 last year, accounting for 1 percent of global CO2 emissions.
China takes action against ‘mining’
Apparently, some places have noticed the serious damage that “mining” brings to the local environment and ecology, and have started to take multiple measures to clean up and shut down virtual “mining” projects.
The Inner Mongolia Autonomous Region, following the clear “comprehensive cleanup and shutdown of virtual currency mining projects, all out by the end of April 2021” on March 10 this year, issued a “Notice on the Establishment of a Virtual Currency “Mining” Enterprise Reporting Platform” on May 18 by the Office of the Regional Energy Consumption Double Control Emergency Command. On May 25, the Development and Reform Commission of the Inner Mongolia Autonomous Region drafted the “Eight Measures of the Development and Reform Commission of the Inner Mongolia Autonomous Region on Resolutely Combating and Punishing Virtual Currency “Mining””. The “eight measures (draft for comment)”, including the existence of virtual currency “mining” behavior of the relevant enterprises and related personnel, in accordance with the relevant provisions into the blacklist of bad faith, etc..
In addition, in response to the recent rebound in virtual currency trading speculation, the Internet Finance Association of China and other relevant associations jointly issued an announcement that the exchange of legal tender and virtual currency and the exchange of virtual currency between the business, in violation of relevant laws and regulations and suspected of crime. May 21, the fifty-first meeting of the State Council Finance Committee clearly put forward to combat bitcoin “mining” and trading practices.
Zhao Lei, a researcher at the Institute of Law of the Chinese Academy of Social Sciences, suggested that, on the one hand, local governments can promote the withdrawal of the stock of “mining” enterprises as soon as possible by controlling electricity consumption, raising taxes and limiting land use; on the other hand, increase the crackdown on illegal virtual currency trading activities and raise the penalties for institutions and platforms that illegally participate in virtual currency trading, speculation or provide support services for them. On the other hand, we should step up the crackdown on illegal virtual currency trading activities, increase the illegal cost of institutions and platforms that illegally participate in virtual currency trading, speculation or provide support services, and increase the deterrent effect of regulation. At the same time, we should continue to promote the risk alert and risk prevention publicity of virtual currency speculation.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/four-questions-about-bitcoin-no-2-mining-how-energy-intensive-is-it/
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