“Mining” gold is more expensive of bitcoin mining?

There is a perception that mining bitcoin is detrimental to the environment because it supposedly requires huge amounts of energy. This topic has been written a lot, and the point is simple: in absolute categories, meinig is extremely energy intensive. However, according to the analysis of long hash, conducted by Vladimir Jelisavcic, bitcoin mining much less energy compared to mining (extraction) of gold.

To estimate the amount of energy consumed by bitcoin Jelisavcic method uses two estimates: the approach can be described as “top— down” approach and “bottom— up”, due to the nature of bitcoin as a decentralized network with millions of miners and lack of structure which would be engaged in the evaluation of the energy consumption.

In the approach “top— down” rewards per block are used as background to estimate the amount of energy consumed. In the report researchers said

“Every time you create a new block, miners get to 12.5 bitcoins. If we assume that the blocks share the time intervals of 10 minutes, is that every hour, the miners earn about \$562 500 (12.5 x \$7500 x 6). If the miners were spending 30% of this amount (\$562 500) for the purchase of electricity, how much would they buy? The response contains the estimate of the volume of energy consumed. Electricity prices vary greatly, but we can assume that for consumers it is about \$100 per MW. To support the blockchain of bitcoin goes approximately 1,688 MW”.

In the approach “bottom— up” the size of the hash is used as a prerequisite for the evaluation of the energy consumption. In this case, it is assumed that each miner uses the latest model S9 Antminer that handles 14.5 terahara per second. As stated in the report:

“This means that to support the blockchain of bitcoin requires the equivalent of 3.45 million units of Antminer S9. S9 consumes 1,650 watts; respectively, to 3.45 million units will consume 5,693 MW. Let’s start with 5,693 and assume that older equipment for mining approximately 25% less efficient than the S9, implying that to support the blockchain currently requires about 7,000 MW.”

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If we average 1,688 MW, using the approach “top— down”, and 7,000 MW by using the approach “bottom— up” estimated cost of the total energy consumption of bitcoin is approximately 4,344 MW.

Now consider the consumption of the gold. The author uses the calculation data of Barrick Gold Corporation (world’s largest gold mining company).

Based on figures from the annual report of Barrick, the author comes to the evaluation of the energy \$6 billion, and the total cost of electricity consumed annually is estimated at \$87,3 bn. it Then sums the two indicators:

“Summarizing, we say that \$6 billion of direct energy consumption is about 92 million barrels annually (\$6 billion/\$65 barrels). This means that the direct energy costs of the gold mining industry (diesel fuel) is approximately 0.27% of the oil consumption worldwide. Compared to that, bitcoin consumes only 0,07% of the total global amount of electricity”.

Some famous personalities have commented on the calculations Jelisavcic. So Joseph young on 14 September wrote:

“Yes, the annual cost of mining bitcoin is \$4 billion, while “mining” gold costs annually \$80 billion Since mining bitcoin is not simply increases his stock, but his claims transactions and payments, you should compare the cost of bitcoin mining, with the cost of energy consumption in the metals & mining + work clearing organizations”.

The discussion was joined by John lillich, a member of the development Studio Ethereum ConsesnSys, who spoke on the issue of differences in the pattern of consumption of the two assets:

“Truly relevant question of whether the low efficiency of the efficiency of energy use in cryptosphere justify benefits, such as custody of assets. I am convinced that the excellent! It’s worth it, but only in the case that our sector will make it a priority the pursuit of efficiency profit that provides proof of share ownership”.

Although the analysis extends to traditional non-renewable energy sources, we should not forget that attempts are being made to use mining renewable sources of energy, so the process will be environmentally friendly.

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