The immense power consumption of Bitcoin mining causes climate damage and increased costs.

The cryptocurrency Bitcoin is on the rise again. But mining new coins is becoming increasingly computationally expensive. The carbon footprint is frightening.

Where centuries ago miners worked the rock with pickaxes in the hope of unearthing valuable precious metals, today heavy equipment is used. It's no different for today's digital miners, also known as miners: just a few years ago they were able to mine virtual Bitcoin gold with simple computers, but today they need entire server farms to do this. And they are energy hungry – and above all, harmful to the climate.

110 terawatt hours (TWh) – that's how much electricity the high-tech computers of Bitcoin miners worldwide could consume per year, the Center of Alternative Finance at the British University of Cambridge estimated two years ago based on daily data on computing power.

That's more electricity than the entire Netherlands uses in a year. By May 2023, the estimated electricity consumption for mining Bitcoins was around 95 TWh. The annual peak was reached in 2022 at 204.5 TWh, exceeding Finland's energy needs.

One reason for this is the recent surge in the Bitcoin price. In 2022, the digital currency reached an all-time high of over $69,000, but the value has since fallen again. But this sparked a new gold rush in the mining scene.

It is worthwhile for the players to invest in hardware in order to benefit from the rise in Bitcoin. Miners always earn income when they are the first to solve a certain cryptographic puzzle.

And because this puzzle becomes more complex the more miners are involved in the solution, it requires immense computing power. The effort is worth it: The miners receive 6.25 Bitcoin as a reward, which is the equivalent of between 150,000 and 200,000 dollars, depending on the exchange rate.

However, the reward for Bitcoin halves every four years. This process is called Bitcoin Halving. The next Bitcoin Halving is expected on April 17, 2024. Then the block reward for Bitcoin miners is halved to 3,125 Bitcoin.

As data from analysts suggests, professional miners in particular are investing their Bitcoin proceeds directly into new, even more powerful computers. Private miners have a difficult time in this competitive market, not least because of the high energy costs.

In addition to professional mining companies, the Bitcoin frenzy is also attracting more and more underground players. A case from Bulgaria shows the extent to which illegal mining can reach: In 2020, two men were exposed there for tapping power lines over several months and thus stealing energy worth 1.26 million euros for their mining farm.

According to the authorities, the electricity could have supplied the nearby town of Kyustendil with a population of 120,000 for a month. The coup went down in history as the country's largest electricity theft - and is not an isolated case.

Iran also reported increasing power outages in Tehran and other major cities. Although power outages are not uncommon due to the ailing power grids, this time the government blamed illegal Bitcoin miners for them.

The country on the Persian Gulf is particularly popular among miners because of its low electricity prices. Around 1,600 Bitcoin data centers have now had to close as a result of the power outages.