Bitcoin prices surged dramatically in 2017 driving everybody crazy, however, there is another value which as well showed sharp spikes and it is none other than ‘the energy required to mine Bitcoin’.
According to a recent Morgan Stanley report, Bitcoin mining takes 30 times the amount of energy required to power all the Tesla cars in the world.
The Morgan Stanley analyst wrote that Bitcoin mining took about 36 terawatt hours of energy in 2017, the same amount consumed by the entire nation of Qatar. And in 2018, this value is expected to double or even triple, reaching 125 terawatt hours, a level all the electric vehicles aren’t set to reach until 2025.
On the other hand, all the Tesla cars in 2017 – about 280,000 as revealed by the company’s statistics – consumed less than1.3 terawatt-hours of electricity during the whole year, a Fortune analysis pointed out. The calculations in the analysis were based on the assumption that each Tesla car drove about 15,000 miles (average) at a rate of 30 kWh of electricity per 100 miles (based on the average mileage rate for Tesla Model S and Model 3 cars).
Now, these calculations prove that mining Bitcoins in 2017 took 29 times as much energy as used to charge all the Tesla cars on the road today.
Now why does Bitcoin mining consumes this insane level of electricity?
Bitcoin works on a distributed ledger technology known as the ‘blockchain’. Now in order to verify bitcoin transactions on the blockchain, a set of highly complex mathematical equations are to be solved by computers that require the huge amount of resources (the main reason behind huge energy consumption).
Different cryptocurrencies consume different amounts of energies for being mined and all of them require much lesser energy than bitcoin.
According to the bank’s analyst, it costs about $3,000 to $7,000 to mine a single BTC including the expense of both energy and hardware.
“That said, mining is very profitable at today’s bitcoin price, and if cryptocurrencies continue to appreciate we expect global mining power consumption to increase,” wrote the Morgan Stanley analyst.
The analyst could not find any relation between bitcoin price and energy costs. The bitcoin price is not yet confirmed to affect the electricity consumption. Due to the volatility of Bitcoin prices, it is very unlikely of it to be vulnerable to energy prices.
“We do not see cryptocurrency values being driven by electricity costs in the near term,” the Morgan Stanley analysts continued. “2017 shows that cryptocurrency pricing appears not to be fully based on fundamentals.”
The analyst concluded his research note by sharing an idea of how energy companies could utilize cryptocurrencies to increase their stock prices. “Perhaps global utilities should start accepting Bitcoins for payments.”