Bitcoin Mining 20 times more Energy Efficient than Gold Mining
Longhash, a blockchain accelerator, has released a new study which confirms that the mining of Bitcoin is more energy efficient than the mining of gold. According to the study, upwards of $87.3 billion is spent on the mining of gold annually. Bitcoin mining, on the other hand, costs just $4.3 billion.
The above figure suggests the mining of gold take up 20 times more energy and expenses when compared with the mining of the top cryptocurrency. This figure is even more surprising, given that crypto-adoption critics have long said that Bitcoin mining consumes too much electrical energy, because of which the environment is suffering.
Energy consumption is not the only area where there exists a huge disparity between these two assets. Market valuation also sees varied numbers with the entire cryptocurrency market valued at $200 billion while the gold market is worth $8 trillion.
Researchers tend to justify the high cost of gold mining by attributing it to its high market capitalization. But this justification builds from the premise that the only objective of mining the cryptocurrency is to increase its supply, ensure constant circulation and maintain demand.
Moreover, an important facet of Bitcoin and other cryptos is the proof-of-work (PoW) protocol, wherein mining is involved when settling transactions. This would amplify the cost of Bitcoin without increasing the amount in circulation. Given this fact, the cost of mining Bitcoin should be compared to the combined cost of mining and transferring gold to give a more accurate picture.
Crypto-adoption is growing tremendously in several developed and developing countries. In order to facilitate the same, there is a gravitation towards more renewable forms of energy. China and Chile are seen as pioneers in this realm of mining with renewable energy sources offered for free to residential houses and corporations.
Non-renewable forms of energy are used more extensively in order to mine cryptos because it is lighter on the pocket and saves time. This drawback is not exclusive to Bitcoin mining, it is true for the mining of several metals, including gold.
John Lilic, member of the Ethereum development studio ConsesnSys, chimed in on the difference in the energy consumption between the two aforementioned assets. “The real question is whether the gross energy inefficiency costs in crypto is worth the benefits like custody over assets. My contention is Yes! It is worth it but only if our industry prioritizes & continues to work towards energy efficiency gains like Proof of Stake,” he stated.
Image via Shutterstock & Chart via Longhash
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