Electricity Supply Needs Make Bitcoin Dependent On The Government
The claim by the Bitcoin advocates that the establishment is free from government’s control is far from true since Bitcoin seems to be heavily dependent on the government for an abundant and cheap electricity supply.
Bitcoin’s Proof of Work (POW) protocol is what is making the company face a desperate need for electricity. Notably, POW can be explained as the complicated puzzles that must be solved by the Bitcoin miners to secure the entry to verify the block of transactions and submit a claim for the mining reward. As on date, the present value of the mining reward is 12.5 new bits coins and the transaction fees. The miners will need a lot of computation skills to guess these mathematical puzzles.
The scenario makes it clear that those miners who are hardworking and owning advanced computing systems will only win. POW will generate a hash or sequence of digits without any clues or logic, in fact, there is never an element of solving in this. The miners will only have to make an extensive amount of guesswork.
The more the number of guesses the miners can make per second, the more are their chances of winning. Also, the more the number of tickets they buy, the more is their chance of winning. Hence advanced computers and access to unlimited electricity are a crucial need necessitated by POW. The miners must upgrade to advanced computers or lose out their chances of winning to the other miners. The specialist mining rig combined with an exclusive processor called as an Application-Specific Integrated Circuit (ASIC) is very expensive.
Studies show that over 80% of the Bitcoin mining happens in countries that have cheap and abundant electricity. This is because POW uses an enormous amount of electricity and hence the biggest cost for the Bitcoin miners is electricity.
With the expected rise in Bitcoin price, the consumption of electricity will also rise. Some governments worldwide have already started denying Bitcoin miners access to public power grids. In the US, studies show that the electricity consumption by the Bitcoin miners seriously impacts the ordinary electricity consumers.
Yet another concern discovers that Bitcoin’s POW protocol carries an environmental cost. Many counties do not prefer supporting Bitcoin mining at the expense of their own communities. Even the private electricity suppliers need to abide by the government regulations and it does not make sense commercially for them to supply power to Bitcoin.
Even if Bitcoin might wish to produce its own electricity, it will need land and natural resources which can’t be obtained without the consent of the government. Hence in some way or the other, Bitcoin is completely dependent of the government for its electricity needs which becomes its Achilles heel.