Every transaction in a cryptocurrency needs an entry on a blockchain. Around five million servers and computers worldwide are constantly calculating new blocks and thereby confirming transactions. This requires electricity. High energy consumption has been one of the biggest criticisms of cryptocurrencies from the beginning.
Calculating Bitcoin transactions alone consumes between 108 and 130 terawatt hours (TWh) of electricity per year, depending on the estimate. For comparison: the total Swiss electricity consumption in 2021 was 58.1 TWh. Bitcoin miners are always looking for the cheapest electricity possible because it is the only way to optimize their profits.
Bitcoin ban requested
As long as this comes from renewable energy sources, the ecological balance is halfway in balance. However, about a third of the electricity used for Bitcoin mining still comes from cheap and dirty coal-fired power stations.
With the impending energy shortage, crypto miners are facing headwinds. China had officially banned mining a long time ago. Much is still being deduced about Chinese calculators. In Texas, the new Eldorado for miners, all Bitcoin computers had to be shut down in July as the power grid was overloaded. And there were even calls for a Bitcoin ban in Switzerland.
Ethereum saves energy
The best way to save energy is with falling prices. The lower the course, the less valuable it is for many backyard researchers to calculate blockchain entries. Energy consumption for Bitcoin transactions also fell during the current crash.
But there is another way: Ethereum, the second most important cryptocurrency after Bitcoin, has fundamentally changed the way transactions are confirmed. It took six years to prepare for this change, but it pays off very well. Since its launch, the estimated annual electricity demand for Ethereum has dropped from around 80 TWh to just 0.1 TWh.