Bitcoin mining has reached a record high – but the “dirty secret” of the cryptocurrency continues to rumble underneath.
In some cases, the rumble is very real: the BBC reported this week on the “constant hum” that some in the US are subjected to as power plants generate the energy required to create new bitcoin.
Mining is at the very heart of cryptocurrency: each bitcoin, which is currently worth around $110,000, began its life as a result of this complicated computer process. And the entire system relies on it to keep working.
At its beginning, cryptocurrency mining was relatively easy: the network was small enough that it could be done on a laptop. Now, it requires vast facilities full of mining hardware, made of specialised computers built to do calculations as quickly and reliably as possible.
Cryptocurrency mining is a relatively straightforward process, if a very complex industry. In short, the technology underpinning the cryptocurrency allows users to ask computers to undertake complicated and pointless computing tasks to find specific numbers – known as nonces – that allow for the creation of new bitcoin.
Those numbers are simple to check but hard to find in the first place, analogous to digging for weeks to find a nugget of gold. Bitcoin mining is really the computerised version of that, and serves as a way to check
As bitcoin becomes more valuable, mining pays better. That means that it has flourished into a huge, global business, of companies that buy vast amount of computing power to check what is done.
While mining is profitable for those that do it, that is really only the secondary reason it happens. The mining itself secures the bitcoin network, since it means that no specific computers can break it, and that keeps the system of payments safe.
The growth of bitcoin mining into a global industry has led to intense criticism. All of that mining is incredibly energy intensive – it uses more electricity than many countries – which in turn has led to questions about the sustainability of that work, especially because the energy is not actually being used for anything.
Those in the cryptocurrency mining business have looked to offset that with cleaner processes. For years, some in the industry have been seeking cleaner ways of powering those systems – but there is nothing within the technology itself that rewards those who are mining bitcoin in more green ways.
Other solutions have involved moving away from mining altogether. Many newer cryptocurrencies have moved instead to a proof-of-stake model – such as Ethereum, the second largest, which did so in 2022 – which is more energy efficient.
Eventually, bitcoin mining will come to a stop. Over time, the reward for each mined block is reduced, until 21 million bitcoin have been created, which is estimated to happen around 2140.
