Depending on the country, the costs of making 1 Bitcoin vary greatly. In some locations miners seem to be able to achieve 800% profit on their investment, while in certain destinations attempts at making the world’s most popular crypto coin aren’t worth the energy.

Recently Swiss computer scientists proposed an alternative to bitcoin that costs nearly nothing to produce but remains highly secure.

Zero-energy crypto coins? How is it possible?

The costs of creating the most popular crypto coins keep hiking with the rise of energy prices and more complex computations required as the market matures.

But Swiss computer scientists managed to invent a digital currency algorithm that would leave close to zero carbon footprint, while keeping the transactions secure.

Rachid Guerraoui, a professor at the research institute of technology in Lausanne, Switzerland, suggest the model for digital money should rely on the concept of “innocent until proven guilty” rather than the energy-consuming all-chain consensus. The scientist call their idea “a minimalist approach”.

The system called Byzantine Reliable Broadcast could offer secure transactions at a fraction of the cost of the Bitcoin, which currently produces about 300 kg of CO2 per transaction. The whole of Denmark is leaving as much carbon footprint as all the cryptocurrency transactions in the world.

The idea seems to have caught up with the academic world, attracting the Best Paper Award at DISC 2019 symposium on distributed computing.

How much does it cost to create 1 Bitcoin?

Bitcoin is a virtual currency but its creation and use consume significant energy resources, which adds to global warming, scientists warn.

To obtain bitcoins, the miner has to generate a block – a certain complex information structure.

The most complex mathematical calculations are required for that. The global Bitcoin network rewards people who do it. Anyone is able to connect to the network. The process of currency creation is called mining.

Recently the computing power used in crypto currency mining has been soaring. In 2018 alone it has increased 4 times!

Depending on the place where the crypto coin is generated, the costs will wary greatly. In most developed countries, as J. P. Morgan analysed, the cost of production of a coin is higher than the market value. However, in countries where the energy is cheaper, it could be still viable.

Jordan Tuwiner reported in January 2019 on costs of mining of 1 bitcoin, considering all steps of the process.

Certainly, the current price of the virtual coin is the major contributor of its profitability. The cost of power by country doesn’t jump up and down that much. Hardware failures, power outages, network disconnections and price crashes all are parts of the equation for bitcoin miners. Thus, Tuwiner concluded that the crypto currency is at the point of diminishing returns and the bitcoin gold rush is over.

But is it, really? Maybe there are still places on the planet where even the lower priced bitcoin would give you a great return on investment?

Just like the cost of dating is higher in western countries as compared to some locations within Eastern Europe, mining of cryptocurrency seems to still be lucrative in certain places of the world.

The creation and use of bitcoin requires consumption of energy resources.

Costs of mining per country

For instance, in Ukraine it would cost only USD 1,852 to generate 1 Bitcoin, as compared with $4,758 in the USA and $9,913 in Australia.

• A Bitcoin made in Russia would cost $4,675, if you were to pay the power bill.
• Similar costs would expect miners in Moldova: $4,651.
• In Romania, the cost of opportunity is even higher: $5,698.
• A Bitcoin made in Belarus would take $2,177 worth of electricity to produce.
• While one from Kazakhstan would cost $2,835.

However, many miners manage to plug into large electrical systems illegally, thus making coins without paying the bills.

The leader in opportunities to mine cheap cryptocurrency is Venezuela with only $531 per coin. The most expensive coins would be made in South Korea, where the electricity required to power the process would take you back nearly 13 thousand (USD 26,170).

The cost of electricity varies by country, this is why such variability in costs, according to Market Watch (2018).

Costs of mining per country (2018 data).

Environmental costs

As we reported earlier, there is a cost of Bitcoin to the environment that is taxing. We are talking, of course, about the carbon dioxide that is the result of using all that computing power required to make the crypto coin.

The carbon footprint is the amount of carbon released into the atmosphere in the form of greenhouse gases as a result of any productive activities.

Recently a team of scientists from the Technical University of Munich (TUM) gave a verdict about the costs to the environment from the world’s first digital currency network.

The scholars studied such data as IPO registration (initial public offering of shares) of the companies that produce equipment for blackchain operations.

Earlier attempts to estimate the volume of CO2 emitted into the atmosphere by energy generation and consumed by mining have already been made. However, these studies were quite rough, according to Christian Stoll from the Massachusetts Institute of Technology (MIT) and in TUM. The world needed a better prognosis, the academics resumed.

How much CO2?

Stoll’s team persistently collected available data and conducted calculations of energy consumption by the Bitcoin network.

It primarily depends on the hardware. Stoll explained that special systems known as miners on the basis of ASIC are used. The researchers had looked into companies producing these miners, to find out the volume of their outputs.

It was also important to learn whether the “handicraftsmen” working with the only miner at home were engaged in mining or it was done by professional operators of one of newly emerged powerful “bitcoin factories”.

In these operations, additional energy is necessary only for cooling the data-processing center, noted Stoll. Scientists used the statistical data published by a pool – a group of miners cooperating with each other. This data included also the computing power of participants of a pool.

As a result, it turned out that the Bitcoin network in 2018 consumed around 40 terawatt hours (a terawatt is one trillion watts). Thus, what is the amount of the CO2 allocation for the power generation?

Bitcoin network in 2018 consumed around 40 terawatt hours.

Asia is a front runner

Researchers did not wish to be limited to figures alone. Therefore, they decided to find out the location of miners. They were helped by pool statistics again. As Stoll explained, miners unite to receive a reward for the solution of puzzles – as participants in lotteries. Judging by the IP addresses in statistics of two largest pools, miners usually enter pools in the homeland or somewhere nearby.

It turned out that 68% of the Bitcoin network’s computing power is accounted for Asia, 17% – for Europe and 15% – North America. These results were combined with figures on the carbon intensity of power generation in different countries.

The result of the research: the carbon footprint of the Bitcoin network makes from 22 to 22.9 megatons a year which is comparable to the footprint of Hamburg, Las Vegas or Vienna.

Christian Stoll concluded that obviously, there are also more important factors leading to climate change. However, he believes it is worth to consider some cryptocurrency mining regulation. For instance, mining “factories” could be connected to sources of renewable energy. This could reduce the cost to the environment due to the use of crypto currencies.

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