Jason Lomberg, North American Editor, PSD
Just by typing the above, I’ve likely opened a can of worms about monetary systems, the role of government in regulating currency, and possibly even the pros and cons of the gold standard.
But the future of Bitcoin – and every brand that survives the inevitable crypto crash – is dependent on a lot more than philosophical differences.
Instead, rising energy demands, unsustainable computational requirements, and the specter of federal regulation will dictate where crypto goes and the role it plays in the economies of the future.
Just recently, a digital payments provider, Square, announced an open-source Bitcoin mining system.
Square CEO Jack Dorsey claimed that the custom silicon solution would be built "in the open in collaboration with the community." And that speaks to one of crypto’s worst-kept secrets.
"Bitcoin mining should be as easy as plugging a rig into a power source. There isn't enough incentive today for individuals to overcome the complexity of running a miner for themselves," Dorsey said.
Said complexity is increasing all the time. Bitcoin is “mined” by computers solving complex equations, and the first one to reach a solution – to “discover” a block – is rewarded with a set amount of BTC, or a “block reward.”
Bitcoin was initially conceived with an eventual hard cap of 21 million units – setting it apart from centralized paper money, which can be printed at-will – and while the original block reward was 50 BTC, the payment halves every 210,000 new blocks.
So while 18.5 million BTC have been discovered – about 88.3% of the total – because of the halving process (currently at 6.25 BTC), we won’t exhaust the total supply until around 2140.
Because of the increased demand for Bitcoin – which sits at an all-time high of $60,000 per BTC – the computational requirements are rising, creating a figurative gold rush (ironic, since many compare crypto to gold as a hedge against inflation) with umpteen entities just lobbing huge amounts of computing power at it.
In turn, this is increasingly shutting out the little guys, while the computing, itself, is a voracious energy hog.
According to crypto analyst, Alex De Vries, Bitcoin consumes as much power as all data centers in the world, with the 1 million crypto miners, worldwide, using as much electricity as Malaysia, Sweden or Ukraine do in one year.
Meanwhile, Bitcoin’s carbon emissions are about 98.9 megatons, equal to London, and with more 60% of Bitcoin mining powered by fossil fuels, one study claimed that if crypto mining became as widespread as other technologies, Bitcoin, alone, could push the Earth’s temperature 2° higher.
An open-source mining project could alleviate some of those energy demands.
Square’s CEO claimed that improved "silicon, software, and integration" could reduce Bitcoin’s power requirements (and carbon footprint), and since the supply of BTC will last at least another 120 years or so, some sort of energy reduction is imperative.