Experts say Bitcoin brings huge energy consumption and chip shortage

As Bitcoin has gained the favor of investors, the cryptocurrency market has been up and down, reaching an all-time high of US$58,000 per coin this year. Financial economist Alex de Vries quantified how the soaring price of Bitcoin has promoted the increase in energy consumption, saying that it has exacerbated the global shortage of chips and even threatened the security of the international situation.

According to the figures on January 11, 2021, it is estimated that all miners add up to solve the equation every second more than 150 times to the power of 18, that is, there are 18 zeros after 150. The computing power of the mining machine and the cost of electricity have become the key to profiting from Bitcoin.

If you are a Bitcoin user and use it for transactions, you are not the one who pays the electricity bill directly. From the user's point of view, this is a bit like a hidden cost. "The author Alex said that he is the founder of Digiconomist (@DigiEconomist) and has been tracking new digital trends such as cryptocurrency.

We understand that hidden costs are not just energy consumption. Based on the previous Bitcoin price in January, Alex estimated that the entire Bitcoin network may consume up to 184TWh of energy each year, which is close to the energy consumption of all data centers in the world. The energy consumed also resulted in 90.2 million tons of carbon dioxide emissions, which is equivalent to London's carbon emissions.

In addition to energy consumption, the market price of Bitcoin incentivizes miners to invest in hardware and electricity. When prices rise, more “miners” place orders to buy and run hardware, which leads to increased energy consumption. Due to excessive demand, hardware manufacturers have stated that their mining machines or graphics cards have been sold out, and some customers may not receive orders until a long time later.

Mining machine manufacturers are still competing with personal electronic products and electric vehicles for global chip production capacity, exacerbating the current global chip shortage. Alex said: "Policymakers can intervene by raising electricity bills or confiscation of mining equipment. Taxation of bitcoin mining equipment manufacturers or restricting their access to chips are also strategies that can be considered. Although bitcoin is a decentralized Currency, government agencies can supervise the trading platform and prevent its transactions to affect its value.”