While the biggest news out of the cryptocurrency world over the past several months has generally been the dramatic increases in price that Bitcoin, Ethereum, and Ripple (among others) have all enjoyed, there's more to it than that. Yes, cryptocurrencies are making huge gains to market capitalization and customer base all around the world. Ethereum in particular has seen its share of the industry's market cap grow so much that it is rivaling Bitcoin for the dominant spot at the top of the digital currency list. Along with the growth in Ethereum's popularity and price has also come an increase in mining, and particularly mining by amateur prospectors working at home. Now, in a report by Futurism, it seems that these miners are using the same amount of electricity in their operations as it would take to power a small country.
45 kWH of Electricity Per Mining Rig
Household computers generating new Ether units via graphics cards and processing power use at least 45 kWh of electricity to do so, according to Digiconomist founder Alex de Vries. By this calculation, the entirety of the Ethereum network may be using as much as 4.2 Terawatt-hours (tWh) in the process of mining Ether. This is equivalent to (or a little more than, to be specific) the electricity consumed by the island of Cyprus in the Middle East.
This is certainly a huge amount of electricity being pumped into the generation of new cryptocurrency, but there are some analysts who suspect that the total may be different. Because the Ethereum blockchain is decentralized, some argue that it is actually nearly impossible to definitively determine how much electricity home-based Ether mining rigs are using. Regardless of the specifics, though, it seems that mining cryptocurrencies is a hugely energy-intensive endeavor.
Ways to Increase Efficiency?
Mining cryptocurrencies, and thereby maintaining blockchains, which are known to be one of the most efficient information ledgers available, is a process that is itself fairly inefficient. And yet Ethereum has plans to shift away from its current mining algorithms in an effort to make the process more efficient. Ethereum is working on developing a model that operates not on Proof of Work, but rather on Proof of Stake. This means that an Ether holder will be able to mine just by having their rig connected to the larger system. Vries believes that a Proof of Stake algorithm would see energy consumption "become negligible." In the meantime, though, Ether mining will require vast amounts of electricity and computing power. Ether units are likely to continue to increase in price, and the market value of Ether will follow, and that will inspire even more miners to go looking for coins. Will the miners end up using as much electricity as the price of the currency can support?