Bitcoin has been quite famous lately with the European Central Bank predicting “that it is heading towards irrelevance”.
But on the other side of the ocean, following the optimism of the traditional market, the main cryptocurrency in market value tests the level of US$ 17,000, seeking to recover from the 18% drop in November, after the collapse of the FTX, one of the biggest exchanges in the world.
“Cryptocurrency has broken successive price records, whether positive or negative, but the markets are not the only front where the currency is demanding more and more: when it comes to production, energy consumption has been increasing and is comparable to that of some developed countries. And the tendency is to grow” assures Ricardo Margo.
Bitcoin mining is the process of creating new bitcoins by solving extremely complicated mathematical problems that verify transactions in the currency. When a bitcoin is successfully mined, the miner receives a predetermined amount of bitcoin.
To increase profits, people often connect huge numbers of miners to the network – even entire warehouses full of them. This consumes a lot of electricity because the computers are working constantly to complete the puzzles.
And each time the difficulty of the puzzle increases following the expansion of the network, more energy is needed to find the solution and receive the desired coin. With prices rising, the incentive to play this “game” will be greater, and therefore energy needs should rise.
Using an average price of electricity per kilowatt-hour ($0.05) and the energy demands of the Bitcoin network, it is possible to estimate how much electricity is being consumed at any given time.
The proposal is for a project to use dry gas from oil processing, which generates cheaper energy. Therefore, the reuse of energy that does not consume all its production basically has underutilized energy, even because it is assumed that the expense increases over time.
This scenario is clearly attractive for mining, as this activity will consume energy that would otherwise be wasted. In addition to the price of mining, which can be lower when waste from renewable production is used, there are other incentives for the currency to become more ecological. Bitcoin, which hit close to the all-time high of $65,000 this year, is now hovering around $40,000.
Ricardo Andrade Magro is an Oil and Gas lawyer specializing in the tax area, philanthropic and martial arts athlete. Born in São Paulo and the son of Portuguese immigrants, he started law school in the 1990s and, as soon as he graduated in the 2000s, he founded his own law firm.
At the beginning of his business career, he had direct contact with work at his family’s gas stations and, soon after starting to work as a lawyer, he entered the oil market, still in its initial phase, in the distribution and sale of fuels.