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How much electricity does bitcoin mining use?
Bitcoins are the most famous virtual currency. Anyone can participate in bitcoin transactions and receive compensation in exchange. However, to do so, you need to use electricity. Does bitcoin mining pay off if you compare what you earn to what you spend?
The latest financial trend operates in cryptocurrencies. These include litecoins, peercoins, and namecoins… but the first and most popular of them all is called bitcoin.
We’ll explain what bitcoin is, what bitcoin mining means, and whether it is profitable, taking into account the consumption of electricity it involves.
What is a bitcoin?
Bitcoin was the first cryptocurrency. It was founded in 2009, and like the other cryptocurrencies, it is digital money. You cannot touch it with your hands, but it can be used to both purchase and sell things, and for investments.
Cryptocurrencies like bitcoin allow you to carry out transfers of funds between individuals, without any intermediary. All transactions are anonymous, irreversible and guaranteed, in the sense that it is impossible to pay for something without having funds.
How do bitcoins work?
A good analogy is Wikipedia, an encyclopaedia written and revised by practically anonymous collaborators. Anyone can contribute, correct and add nuances in a decentralised structure that is continuously being tested.
The reliability of Wikipedia depends essentially on the question of viewpoint. It is clear that errors occasionally sneak through, but it is also certain that they are usually corrected with unimaginable speed compared to “traditional” encyclopaedias, which had to be sent to have a new edition printed in order to amend errors or incorporate new information.
“Bitcoin miners make their computers available to the system in exchange for a small remuneration.”
The security of cryptocurrencies is often questioned. There is no State or Central Bank behind the bitcoin system, and so it can only be protected from fraud and falsification through mining.
Bitcoin mining means using your computer to create and approve a large number of currency transactions. Like the editors of Wikipedia, the bitcoin users themselves generate and supervise the algorithms behind each transaction.
Unlike Wikipedia, bitcoin mining is not a selfless act. Bitcoin miners receive payment for their work.
Bitcoin transactions are grouped into blocks. Processing these blocks and encrypting them to guarantee security requires complex mathematical calculations. Bitcoin miners, with their machines, act as supervisory authorities in the market.
In exchange, the system distributes earnings between those who successfully participate in the coding and supervision of the transactions.
We’re talking about thousands of computers connected online and making calculations. It constitutes the most powerful computing body that currently exists. It’s bigger than Google. It’s bigger than NASA. As nobody has a comparable processing capacity, nobody can carry out scams or capital flight in the bitcoin universe.
“The bitcoin mining network is a more powerful and complex system than NASA’s.”
How much is a bitcoin worth?
If there is no regulatory body, and everything functions through a dense network of informal collaborators, who sets the value of a bitcoin?
The value of a bitcoin directly depends on the number and activity of users. If the numbers of investors, miners and transactions increase, the value of bitcoin increases. However, bitcoin has been involved in well-known cases of speculation in which big investors buy and suddenly sell huge amounts, causing instability in the listing of this cryptocurrency.
Bitcoin is convertible: you can exchange it for euros, dollars or other currencies at any time.
How much does bitcoin mining cost?
To find out if bitcoin mining is worth it, you must compare what you earn with how much it costs.
How much do you earn through bitcoin mining? The more resources (capacity of your computer or computers) you share with the network, the more you can earn. In basic terms, the system shares out bitcoins between the hardest working and most efficient miners.
How much does bitcoin mining cost? In addition to the wear and tear on your computer, we’re talking about electricity, which can be significant.
“The more resources (computers) you share online, the more bitcoins you can earn.”
If you have a desktop computer turned on 24 hours per day, and exclusively dedicated to mining bitcoins, your approximate consumption will be 220 Wh (within a very broad range of between 50 and 450 Wh according to the type of processor, fans, etc.).
If we extend it for a full week, and we convert it into kWh (the measurement unit of your electrical consumption), it comes out at approximately 40 kWh per week.
The price of each kWh depends on what it says in your contract, whether or not you're on the free market, and the oscillations of supply and demand if you’re on the regulated market. In this article, we explain the differences between the free and regulated markets.
To give you a specific figure, if you were on the regulated market and taking as a reference the average price of electricity at the time of writing this post (0.11485 kWh), you’d spend 4.25 euros per week mining bitcoins. In order for this task to pay off, you have to earn more.
How to earn more in bitcoin mining
It’s become so fashionable that there are now more and more bitcoin miners. As a result, fewer and fewer bitcoins are being distributed. People are getting less remuneration for the same work.
To attempt to overcome this obstacle, you should concentrate your bitcoin mining time at the times in the day when electricity is cheapest.
- If you're on a regulated market, with this tool, you can check the times with the lowest price per kWh.
- If you're on the free market, there are rates where some hours are totally free. For example, the Happy Time Rate allows you to choose 2 hours per day (or one entire day per week) in which you won’t pay for the electricity you consume.
“You can concentrate the bitcoin mining on the hours in which electrical consumption is very cheap or even free.”
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You don't need to adapt to Endesa's tariffs because they adapt to you. If you go to our catalogue you can compare the different tariffs for yourself. Or if you prefer, you can answer a few questions and we will take care of comparing all the different electricity and gas tariffs and then make a customised recommendation.
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