About 91 terawatt-hours of electricity are consumed to process Bitcoin transactions in one year, half a percent of the total consumption in the world, writes the New York Times.
That is more than electricity consumption in countries like Finland, where about 5.5 million people live.
If you want to pay something with Bitcoin, the first part of that transaction is simple and fast: you open an account on an exchange platform, like Coinbase.
It allows you to buy that cryptocurrency in dollars. After obtaining a digital wallet, Bitcoin needs to be transferred to the digital wallet of the person to whom something is being paid.
Then the transaction must be confirmed by the Bitcoin network, in order for the recipient to be convinced that what he is receiving is not fake. This explains the functioning of the giant online database where this data is stored.
In fact, much of the electricity is consumed there. Around the world, companies and individuals known as Bitcoin miners are competing to confirm this transaction and enter them in a public book in which all Bitcoin transactions are recorded.
They basically play guessing, using powerful computers that expend a lot of energy to try to beat others in that competition. Because if they are successful in that, they will be rewarded with valuable newly created Bitcoin. In fact, this competition for newly created Bitcoin is called “mining”.
For a long time, money was thought of as something that could be held in the hand. Traditional currencies are not completely free to use. Banks, credit card networks, and other intermediaries can control the use of their financial networks.
As a rule, this should prevent money laundering. For example, if you want to transfer a large amount of money to someone, the bank will report it to the state, even if the transfer is in progress. That is why a group of free thinkers figured out how to avoid such controls.
In 2008, an unknown person or several of them under the name Satoshi Nakamoto proposed the creation of an electronic payment system similar to cash, without intermediaries. This is how the currently most famous digital currency, managed by a decentralized network of users, was created.
Today, one Bitcoin is worth about $63,000, but its value often varies. However, the consumption of a large amount of electricity was the reason for the emergence of initiatives for the use of clean electricity in mining, as evidenced by a special certificate.
Bitcoin use has been shown to be accompanied by many illegal activities, such as money laundering. U.S. authorities arrested the alleged main operator of the cryptocurrency website Bitcoin Fog in April on three charges related to money laundering.