The virtual mining of Bitcoins is using up so much energy that it is causing electricity blackouts in some countries, it has been revealed.
Experts say the high-tech activity is consuming a higher level of power than in 159 countries across the globe – amid fears it will use more than the world by 2020.
Bitcoin mining hardware uses approximately 31 terrawatt hours of energy per year – compared with 23 in Ireland and 309 for the whole of the UK.
It is creating a ‘colossal’ carbon footprint as the value of one coin surges to more than £12,000 amid violent swings in the cryptocurrency market.
Bitcoin mining hardware uses approximately 31 terrawatt hours of energy per year – compared with 23 in Ireland and 309 for the whole of the UK (stock photo)
Analytics firm Digiconomist estimates that every Bitcoin transaction uses up enough energy to power nine home in the US for one day.
The virtual currency is made up of lines of computer code which are digitally signed each time they travel from one owner to the next.
Transactions can be made anonymously, making the currency popular with libertarians as well as tech enthusiasts, speculators – and criminals.
Tech-savvy users called ‘miners’ use their computers to make complex calculations in a bid to verify that a ‘block’ of Bitcoin transactions are genuine.
Analytics firm Digiconomist estimates that every Bitcoin transaction uses up enough energy to power nine home in the US for one day (stock photo)
It is similar to cracking a code – and it takes more than 1.7billion attempts each time using an enormous amount of computing power as well as electricity.
Users often combine their processors virtually to work together completing millions of calculations per minute between them.
In reward for their efforts, the miners who crack each code are rewarded with a share of the currency in the form of 25 newly created Bitcoins.
But for the average person, the costs involved with mining are so high that it is no longer worth getting involved.
The virtual currency is made up of lines of computer code which are digitally signed each time they travel from one owner to the next (stock photo)
One facility in China – where half of the world’s Bitcoin miners are based – has 25,000 computers running up a daily energy bill of $40,000.
According to The Times, Eric Holthaus said: ‘In only a few months from now, at Bitcoin’s current growth rate, the electricity demanded by the cryptocurrency network will start to outstrip what’s available.
‘New stress on the grid means more facilities using dirty technologies.
‘By July 2019 the bitcoin network will require more electricity than the entire United States currently uses.
‘By February 2020 it will use as much electricity as the entire world does today.’
In Venezuela, Bitcoin mining has caused blackouts while experts say the mass amounts of energy consumed could instead be used to power homes and businesses.
The virtual currency is in an extremely volatile phase following enormous value growth in recent weeks.
Bitcoin lost almost a fifth of its value in 10 hours on Friday, having surged more than 40 percent in the preceding 48 hours sparking fears the market may be heading for a price collapse.
In a hectic day on Thursday, Bitcoin leapt from below $16,000 to $19,500 in less than an hour on the US-based GDAX, one of the biggest exchanges globally.
Some market watchers attributed the lurch higher to the coming launch of Bitcoin futures on major exchanges.
What is Bitcoin and how does it work?
Bitcoin is a virtual currency that emerged in the aftermath of the 2008 financial crisis.
It can be bought and sold using regular cash, but the actual coins exist only in cyberspace in the form of a numerical code.
Once purchased, they can be exchanged for some goods and services, like normal money or transferred into other currencies.
Unlike money issued by banks and heavily regulated by governments, Bitcoins are untraceable and can be exchanged anonymously with anyone in the world at the click of a mouse.
Conventional online payment methods such as bank transfers and PayPal go through banks, which insist on customers disclosing their identity.
But Bitcoins can be bought for cash through the ATMs with no questions asked.
When the currency was launched in 2009, each Bitcoin was worth just five cents in the US, but last week the value of a single coin reached an astonishing $10,000.