The pendulum has swung with Western governments concerned that Russian’s central bank, the regime, and oligarchs will now use cryptocurrency to evade sanctions, a concern that most agencies believe to be unfounded due to the inability of the cryptocurrency ecosystem to process such large volumes - bitcoin can’t fund a war.Įrik Thedéen, vice chairman of the European Securities and Markets Authority (ESMA), has meanwhile urged the EU’s 27 member states to ban Proof-of-Work mining, claiming PoW has become a national issue in his native Sweden due to the amount of renewable energy it uses. Prior to Russia's war with Ukraine, the central bank of Russia called for an outright ban on cryptocurrency mining, with a recent report claiming the “potential financial stability risks associated with cryptocurrencies are much higher for emerging markets, including in Russia.” Perhaps that was just blind luck, China’s ban coinciding with bitcoin’s best year, but whatever way you look at it, miners seem to shrug off adversity with breathtaking ease. Last year, bitcoin miners raked in $16.7 billion in revenue, more than the combined takings of the previous three years.Įvidently, China’s crackdown didn’t hit miners in their pockets the way many had expected. 2021 saw the highest miner revenues to date, a remarkable fact given the block subsidy is halved every four years. If you believe the people of the world need a self-sovereign digital asset now more than ever, the answer is clearly yes.Ĭertainly, the miners are undeterred. If you’re a net-zero energy campaigner, the answer is probably no. Should a borderless cryptocurrency really consume more electricity than nation states? That depends on your perspective. In the CBECI’s country rankings, bitcoin currently occupies 27th place. According to the Cambridge Bitcoin Electricity Consumption Index, the bitcoin network consumes 125.1 Terawatt Hours (TWh) per year, a little more than Ukraine (124.5) and a bit less than Egypt (149), a country that has banned bitcoin, along with Iraq, Qatar, Oman, Morocco, Algeria, Tunisia and Bangladesh. Such censure is not, on the face of it, unmerited. This has become the great bitcoin energy debate. PoW has continued to attract criticism however, with many deeming the industrial-scale use of computing and electrical power wasteful. As inventions go, they put it up there with the lightbulb and telephone. Proof-of-Work is considered a marvel by bitcoin maximalists. In fact, even if an attacker were to marshal 100 percent of the network hash rate, he would need over two years to completely rewrite the ledger dating back to January 3, 2009. Those who expend electricity to verify transactions have a strong incentive to maintain the ledger’s integrity, and because PoW makes the cost of writing a block punishingly high, the security of the bitcoin network is more robust than it’s ever been. Based on bitcoin’s predictable issuance model, the final coin will be mined some time around 2140.Īgainst all odds, Proof-of-Work has kept bitcoin ticking along for 13 years now with no recorded instances of double-spending. Of course, the currency does have a hard cap of 21 million bitcoins – so nodes can’t go on "producing" new bitcoin ad infinitum. Just as gold-mining is the only way to increase the supply of the world’s most valuable precious metal, bitcoin mining is the only way to increase the supply of bitcoin. This subsidy is then added to the sum of the transaction fees held in the block that is being mined to make up the block reward.
The eponymous blockchain, which recently celebrated its 13th anniversary, depends on a Proof-of-Work (PoW) consensus algorithm that compels miners to solve mathematical problems that are difficult to solve but easy to verify.Īmid fierce competition from rival miners, PoW math problems are tackled and deciphered in exchange for a set quantity of bitcoin known as a block subsidy.
Mining, of course, is the process that brings fresh bitcoin into being.
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