A Shocking Bitcoin Fact

N

Stein’s Law: ”If something cannot go on forever, it will stop.” -Herbert Stein

The Shocking Bitcoin Fact: According to Digiconomist, mining of Bitcoins uses over 30 Terawatt-hours of electricity per year and that number is growing in size everyday.

How much electricity is that? It’s equivalent to the electricity consumption of Denmark and more than the annual electricity consumption of 159 countries.  This is not sustainable and it will be interesting to see what happens to Bitcoin as the energy and costs of mining It continue to soar.

Mining Bitcoin requires an enormous amount of computing power and is similar to solving increasingly difficult math equations. Bitcoins are awarded to computers which verify blockchain transactions using increasingly complex algorithms. Years ago a laptop could mine bitcoin. Now banks of servers are needed to successfully mine Bitcoin. As each Bitcoin is mined the next Bitcoins require solving harder algorithms and more computing power/energy usage.

Bitcoin is fascinating. Here’s a good primer by Alex Bates of our firm explaining Bitcoin: A Few Bits About Bitcoin

As for the price, here’s a chart of Bitcoins and Tulips and some famous financial bubbles:

 

IFOD on Dutch Tulip Craze: Dutch Tulip Craze

A short bitcoin story: My Uber driver yesterday asked what I did for a living. I said “financial stuff.”  He then asked me about Bitcoin and whether it was a good investment. Make of that what you will.

 

3 Replies to “A Shocking Bitcoin Fact”

  1. Thanks John,
    Its seems inefficient, inadequate and like you said, unsustainable.
    After it collapses, I bet parts of this system become a precursor to a future internantional currency. I don’t think “they” will allow paper to last much longer due to lack of control.

Comments are closed.