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On the morning of May 13, U.S. time, Tesla CEO Musk tweeted that he would stop accepting users’ plans to buy Tesla products with Bitcoin, citing the serious energy burden and fossil fuel consumption caused by Bitcoin mining. Musk's tweet triggered a sharp drop in the price of Bitcoin, which fell from above $55,000 to below $50,000. This article will briefly analyze why Bitcoin, as a virtual asset, will become the energy issue that Musk calls.

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How much fuel is it

However, many people have raised objections to the issue of Bitcoin energy consumption. Since Bitcoin mining has no geographic location requirements, most mining machines can be migrated to places with lower electricity costs. Bitcoin mining can arbitrage the value of the power system and increase the economic benefits of current electricity. The BCEI (Bitcoin Clean Energy Initiative) organization believes that Bitcoin can incentivize the use of renewable energy. The electric power required for Bitcoin mining is relatively stable, which is in line with the supply mode of renewable energy power generation. In fact, many large bitcoin mining companies have noticed the "carbon neutral" issue of bitcoin. British listed mining company Argo Blockchain has signed a preliminary agreement with Canadian mining company DMG Blockchain Solutions to launch "the first purely clean energy-driven bitcoin mining pool", which will use hydropower to generate electricity to drive its own mining pool.

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why mining

Under the Pow mechanism, each node that generates a block needs to calculate a mathematical problem of floating difficulty. The first node that solves the math problem can add the block it produces to the blockchain. Whether it is packaging data or calculating math problems, every node has to pay computing power, and the node owner has to pay the corresponding cost. So why do nodes even participate in these activities? It is because Satoshi Nakamoto designed a reward mechanism in the Bitcoin system, and every node that successfully adds a block to the chain will receive a certain amount of Bitcoin rewards. The entire process of obtaining bitcoin rewards is also called mining. Since mining activities, computer computing power will consume electricity, and the source of Bitcoin's power consumption is here.

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Involvement among mining machines

The floating difficulty verification mechanism of PoW makes the computing power involute between the mining machines. The stronger the computing power of the mining machine, the more likely it is to calculate the answer before other mining machines and obtain bitcoins. Under the condition of continuous improvement of computing power, the floating difficulty verification mechanism makes it basically impossible for mining machines with weak computing power to successfully mine. In order to avoid being eliminated and improve their mining success rate, investors can only buy more mining machines, increase more computing power, and let the mining machines run longer. In the process, a large amount of electricity is naturally consumed.

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Does only Bitcoin mining cost electricity?