The second article I ever wrote for this site discussed the current state of the Bitcoin market, using headlines from around the world as proof of a growing trend of pessimism about its future. At the time of that article in August of 2016, Bitcoin prices were trading around $1,000 a share and the highest Bitcoin had ever reached was $1,300 a share in 2013. Yesterday however, Bitcoin made international headlines after once again breaking another all time high in 2017, reaching $10,000 per share, literally 10x their value only 15 months ago.
As someone whom has been pessimistic or dismissive of Bitcoin in the past, let me be the first to say that I was completely wrong about the direction Bitcoin was headed. With that said, here is a look at why Bitcoin has grown so large in 2017, as well as the physical power it has taken the “crypto-currency” to get there.
Not only did Bitcoin surpass $10,000 last night, but it's now nearing $11,000 pic.twitter.com/3ZK138IGUz
— Catalin Cimpanu (@campuscodi) November 29, 2017
What Caused The Surge In Bitcoin Price?
The dark side to Bitcoins growth is that it is indubitably linked to actions of black-hats and cyber criminals alike. For example, have you heard about any hacks or ransomware outbreaks in the news this year? That rhetorical question is also my point, the price of Bitcoin is directly tied to criminal acts online, because criminals always demand Bitcoin for payment. Therefore, the more that hacking activity increases and the more overall hacks there are, the more people are forced to use Bitcoin, willingly or otherwise, and the more valuable the currency becomes to its end users; the hackers. The combined increase of people using Bitcoin also helps the crypto-currency naturally grow in cyber space over time.
Regardless of how Bitcoins “monetary” value soars, the explosion of the Bitcoin market itself has had another interesting effect on the physical power grid. According to new research out of the United Kingdom, the amount of computer/processing power it now takes to “mine Bitcoins” is larger than the combined “technological capabilities” or “power output” of most 3rd world countries. In fact, the amount of physical energy it took from electric grids across the globe to power Bitcoin in 2017 was actually greater than the total power output of 159 countries around the world. As was reported by Security Affairs on November 28th 2017, “According to new research conducted by energy tariff comparison service PowerCompare.co.uk, the electricity used to mine Bitcoin this year is bigger than the annual usage of almost 160 countries.” For some perspective on these figures, this was also more than all the power used in “Ireland and most African nations.”
Read Full Study Here: https://powercompare.co.uk/bitcoin/
The energy used to mine Bitcoin this year is bigger than the annual usage of almost 160 countries https://t.co/6CV8iRLU06
— Security Affairs (@securityaffairs) November 28, 2017
This data also adds to a research project from 2016, funded by ANG, a dutch based international bank, which found that “Bitcoin transactions use so much energy that the electricity used for a single trade could power a home for almost a whole month.” According to ANG‘s findings, despite Government initiatives attempting to curb Bitcoin usage, China currently leads the world in “Bitcoin Farming” production. As for why this is occurring, this is because power prices in China are considerably cheaper per person than they are here in the United States or anywhere else in the world. Therefore, Bitcoin users can establish more connections and use more power for cheaper in China than they can almost anywhere else in the world.
As referenced by the information above, according to Mati Greenspan, an analyst with trading platform eToro, “The top six biggest mining pools from Antpool to BTCC are all largely based in China.” Explaining how “Some rough estimates put China’s hashpower [share of the overall market] at more than 80% of the total network.”
Other Key Highlights from The Research:
- Bitcoin mining electricity consumption has risen 29.98% over the course of the last month. To put this sudden surge into perspective, if the electricity consumption continued at this rate for the remainder of history, Bitcoin consumption would consume all the worlds known electricity by the year 2020.
- Estimated global mining revenues in 2017 were $7.2 billion USD (£5.4 billion)
- Estimated global mining costs in 2017 were $1.5 billion USD (£1.1 billion)
- The same amount of energy it took to mine Bitcoins in 2017 yearly could have powered 2.4 million American homes
- The estimated number of Bitcoin Miners currently living inside the UK alone is 6.1 million – (more than the population of Birmingham, Leeds, Sheffield, Manchester, Bradford, Liverpool, Bristol, Croydon, Coventry, Leicester & Nottingham combined) Or Scotland, Wales or Northern Ireland.
- Bitcoin Miners consume more electricity than 12 US states (Alaska, Hawaii, Idaho, Maine, Montana, New Hampshire, New Mexico, North Dakota, Rhode Island, South Dakota, Vermont and Wyoming)
Categories: Tech Stuff