In order to maintain a healthy Bitcoin network it is necessary to have miners working and confirming the transactions. But to do so, difficult calculations should be processed, something that requires an important amount of energy and it is done with ASIC hardware.
Bitcoin Mining Conference
The first ever cryptocurrency mining conference, which was held on May the 17th in the city of New York, U.S., with important figures in the crypto and mining industry gave their perceptions and ideas on mining activities.
Most of the conference was related to the rapid growth of consumption rates in the crypto mining industry. And indeed, several governments and organizations have been very concerned about this situation and the impact it could have on the environment.
It is clear that the discussion between Proof-of-Work (PoW) and Proof-of-Stake (PoS) was an important topic as well. Amber D. Scott, CEO of Outlier Solutions – a company related to anti money laundering and consulting services and strategies – was the moderator of the panel of experts.
According to Mrs. Scott the mining activities are related to a ‘spectacular amount of FUD’ due to the fact that the famous virtual currency it is always attacked for the energy consumption required to process the transactions.
Amber Scott commented:
“I think that part of the reason that Bitcoin has been a ‘target’ in this respect is that there are relatively straightforward calculations in terms of power consumption in conjunction with the underlying value not being well understood or widely accepted. For instance, few people question the utility costs of a bank or ATM, and the energy consumption cannot be calculated in a straightforward way.”
And her comments have been backed by Scott Howard, CEO and co-founder of the Toronto-based company ePID Blockchain Technologies. He told the audience that the energy consumption issue in Bitcoin is ‘fake news.’ Moreover, he explained that the topic has been oversimplified by Bitcoin haters.
Traditional Institutions vs Bitcoin
Other important figures present were Alex Petrov, CIO of Bitfury, Jan Capek, CEO of Slush Pool, and Samson Mow, CSO of Blockstream.
All of them agreed about the fact that fiat creation has an important cost as well, and this is something that should be also measured. They all marked the costs related to ATM security, banking systems, buildings, etc.
Mr. Petrov explained to the audience:
“There are 3.6 million ATMs deployed in the U.S. Each of them are using 7 to 800 watts just in standby mode. This alone generates huge numbers of electricity usage, slightly higher than the Bitcoin network. If you add… internal banking systems, CTVs, communicating with other banks, additional protection, you get higher costs than the cost of Bitcoin.”
Howard compared Bitcoin mining activities and its consumption to traditional gold mines. He told the people present at the conference, that gold mining consumes an important amount of energy as well. And he marked an interesting point, when he said that part of the electricity used to mine Bitcoin was originally built to supply the extraction of ore and other precious metals.
Mr. Howard also said that gold mining activities are one of the ‘most toxic and destructive operations on the planet.’
Large energy mega-projects, including hydro dams, produce electricity at all times, and that companies did not build energy companies just to support crypto mining activities.
“To my knowledge, no one has built out any net-new power generation to supply a crypto mine,” he said. “Power generation stations are major pieces of infrastructure that take years to put in place and in the range of a decade to pay off.”
PoS vs PoW
Additionally, the panelists agreed on the topic of Proof of Work and Proof of Stake. They believe that PoS would not allow Bitcoin to be so secure and that it is not going to happen anytime soon. But it is possible to use PoS for some specific activities in private blockchains or the financial sector.
Mow said that using both systems would bring out ‘the worst of both world.’ Mr. Howard mentioned that Dash uses a hybrid model which has been successful but expensive to use and implement in other projects.