New Scientist - UK (2022-05-21)

21 May 2022 | New Scientist | 7

ON 15 May, the price of a bitcoin

was £24,244, less than half of its

high point in November last year.

Meanwhile, Ethereum, another

major cryptocurrency, plunged

in value from £3567 to £

over the same period.

Despite these steep falls,

the total hashrate of the bitcoin

network – a metric that tracks

the amount of computer power

devoted to mining the currency –

continues to hit all-time highs.

Miners obtain a fixed amount

of cryptocurrency by performing

intensive computing operations.

Their costs may be predictable,

but their income, as denominated

in traditional currencies, varies.

The latest data from the

Cambridge Centre for Alternative

Finance (CCAF) shows that

the bitcoin hashrate reached

248 exahashes per second in

February, while more recent data

indicates that it has continued

rising in the intervening months.

Ethereum miners have also

proven resilient to the drop in

prices. On 15 May, the Ethereum

hashrate sat at 1103 terahashes

per second, according to data

from YCharts, while a year before,

the rate was just 613 terahashes.

An increase in hashrate

raises concerns about the carbon

footprint of the cryptocurrency

sector, as more intense

computation generally requires

more electricity usage. This is

likely to be offset by a switch

to more efficient computing

hardware, says Alexander

Neumueller at the CCAF. Its latest

model estimates that the current

annual electricity consumption

of^ bitcoin is 141 terawatt-hours,

which is comparable with the

amount used by Egypt.

“Without doubt, the network

hashrate is an important variable,

but the answer to this question

[of carbon footprint] is much

more complex. How sustainably

the electricity used by bitcoin

miners was generated and the

efficiency of the hardware also play

a decisive role,” says Neumueller.

“We assume in our model that

miners are rational economic

agents – in other words, they

only operate profitable

hardware. Therefore, as

Cryptocurrency mining continues to consume increasing amounts of

computer power, despite a drop in prices, reports Matthew Sparkes

Bitcoin powers on

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Cryptocurrencies

profitability decreases, older, less-

efficient hardware is assumed to

be switched off,” he says.

Along with recent price drops,

the cryptocurrency sector is still

wrestling with the impact of a

Chinese ban on cryptocurrency

mining that came into force last

May. The CCAF said in a blog post

published on 17 May that the

ban has worsened, rather than

improved, this digital industry’s

environmental footprint, as

miners have sought cheaper

(but not necessarily greener)

energy elsewhere.

Artist Kyle McDonald, who uses

cryptocurrencies in his work and

has previously published research

on the energy use of Ethereum,

says that a reduction in the price of

a coin should lead to a reduction in

mining, but that this can happen

over longer timescales.

“Right now, despite the dip

in price, we’re not seeing any

unusual dip in hashrate,” he says.

“There is a slight downward

trend right now in bitcoin, but

not outside of usual variability.

In another week, we may be able

to see if miners are consistently

turning off some of their rigs,

which would indicate that

they are operating on narrow

profit margins.”

And there are anecdotal signs

that an Ethereum slowdown could

be on the way too. One Ethereum

miner based in Australia, who

gave his name as Josh Ward, told

New Scientist that the economics

of mining were less attractive

now that the price had fallen.

“The drop in profits is

disappointing,” he says. “It’s

made me reconsider how I view

the opportunity cost of mining.

On an individual level, there are

quite a few people backing out

of mining and selling their rigs

due to the market crashes.” ❚

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