Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News
      Post Office on the brink of collapse

      Post Office on the brink of collapse

      13 March 2026
      New policy direction targets South Africa's municipal broadband logjam - Solly Malatsi

      New policy direction targets South Africa’s municipal broadband logjam

      13 March 2026
      How electronic warfare is threatening ships and their crews

      How electronic warfare is threatening ships and their crews

      13 March 2026
      Rand slumps for second week

      Rand slumps for second week

      13 March 2026
      Parliament opens nominations for Icasa council seats

      Parliament opens nominations for Icasa council seats

      13 March 2026
    • World
      Musk launches Macrohard in cheeky nod to Microsoft - Elon Musk

      Musk launches Macrohard in cheeky nod to Microsoft

      12 March 2026
      Europe is building an alternative to Microsoft Office

      Europe is building an alternative to Microsoft Office

      11 March 2026
      Microsoft bets on Anthropic as it loosens ties with OpenAI

      Microsoft bets on Anthropic as it loosens ties with OpenAI

      10 March 2026
      World hit by worst oil shock since the 1970s

      World hit by worst oil shock since the 1970s

      9 March 2026
      iStore prices MacBook Neo at R11 999 in South Africa

      Apple debuts MacBook Neo to challenge Windows PCs, Chromebooks

      5 March 2026
    • In-depth
      The last generation of coders

      The last generation of coders

      18 February 2026
      Sentech is in dire straits

      Sentech is in dire straits

      10 February 2026
      How liberalisation is rewiring South Africa's power sector

      How liberalisation is rewiring South Africa’s power sector

      21 January 2026
      The top-performing South African tech shares of 2025

      The top-performing South African tech shares of 2025

      12 January 2026
      Digital authoritarianism grows as African states normalise internet blackouts

      Digital authoritarianism grows as African states normalise internet blackouts

      19 December 2025
    • TCS
      TCS+ | Vox Kiwi: a wireless solution promising a fibre-like experience - Theo van Zyl

      TCS+ | Vox Kiwi: a wireless solution promising a fibre-like experience

      13 March 2026
      TCS+ | Flipping the narrative on AI in the Global South - Josefin Rosén

      TCS+ | Flipping the narrative on AI in the Global South

      13 March 2026
      TCS | Sink or swim? Antony Makins on how AI is rewriting the rules of work

      TCS | Sink or swim? Antony Makins on how AI is rewriting the rules of work

      5 March 2026
      TCS+ | Bolt ups the ante on platform safety - Simo Kalajdzic

      TCS+ | Bolt ups the ante on platform safety

      4 March 2026
      Watts & Wheels S1E4: 'We drive an electric Uber'

      Watts & Wheels S1E4: ‘We drive an electric Uber’

      10 February 2026
    • Opinion
      South Africa's energy future hinges on getting wheeling right - Aishah Gire

      South Africa’s energy future hinges on getting wheeling right

      10 March 2026
      Hold the doom: the case for a South African comeback - Duncan McLeod

      Apple just dropped a bomb on the Windows world

      5 March 2026
      VC's centre of gravity is shifting - and South Africa is in the frame - Alison Collier

      VC’s centre of gravity is shifting – and South Africa is in the frame

      3 March 2026
      Hold the doom: the case for a South African comeback - Duncan McLeod

      Hold the doom: the case for a South African comeback

      26 February 2026
      The AI fraud crisis your bank is not ready for - Andries Maritz

      The AI fraud crisis your bank is not ready for

      18 February 2026
    • Company Hubs
      • 1Stream
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • AvertITD
      • Braintree
      • CallMiner
      • CambriLearn
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • HOSTAFRICA
      • Incredible Business
      • iONLINE
      • IQbusiness
      • Iris Network Systems
      • LSD Open
      • Mitel
      • NEC XON
      • Netstar
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SevenC
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Tenable
      • Vertiv
      • Videri Digital
      • Vodacom Business
      • Wipro
      • Workday
      • XLink
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud services
      • Contact centres and CX
      • Cryptocurrencies
      • Education and skills
      • Electronics and hardware
      • Energy and sustainability
      • Enterprise software
      • Financial services
      • HealthTech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Policy and regulation
      • Public sector
      • Retail and e-commerce
      • Satellite communications
      • Science
      • SMEs and start-ups
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » In-depth » Bitcoin has a dirty secret

    Bitcoin has a dirty secret

    By Agency Staff15 December 2017
    Twitter LinkedIn Facebook WhatsApp Email Telegram Copy Link
    News Alerts
    WhatsApp

    Bitcoin has wowed markets this year with breakneck gains as investors flocked to an asset that exists only in cyberspace. But the laborious creation of each digital bitcoin by private computer networks has real-world consequences in the form of massive energy use — including from fuels that cause the most pollution.

    Eight 100m-long metal warehouses in northern China are a case in point. Bitmain Technologies runs a server farm in Erdors, Inner Mongolia, with about 25 000 computers dedicated to solving the encrypted calculations that generate each bitcoin. The entire operation runs on electricity produced with coal, as do a growing number of cryptocurrency “mines” popping up in China.

    The global industry’s power use already may equal three million US homes, topping the individual consumption of 159 countries, according to the Digiconomist Bitcoin Energy Consumption Index. As more bitcoin is created, the difficulty rate of token-generating calculations increases, as does the need for electricity.

    The energy consumption is insane. If we start using this on a global scale, it will kill the planet

    “This has become a dirty thing to produce,” said Christopher Chapman, a London-based analyst at Citigroup.

    Energy has always been part of bitcoin’s DNA. The person credited with creating the currency, identified only as Satoshi Nakamoto, devised the system that awards virtual coins for solving complex puzzles and uses an encrypted digital ledger to track all the work and every transaction. As the market grew from a hobbyist culture in 2009 to a global phenomenon this year, ever-more computing power was needed by large networks.

    Bitcoin prices have surged more than 2 000% in the past year on some exchanges and touched a record of more than US$17 800 on Friday. Cboe Global Markets began offering bitcoin futures on 11 December, reaching $18 850 on the first day of trading. There are other cryptocurrencies, such as ethereum and litecoin, but bitcoin is by far the largest.

    China, which gets about 60% of its electricity from coal, is the biggest operator of computer “mines” and probably accounts for about a quarter of all the power used to create cryptocurrencies, according to a study of the industry published in April by Garrick Hileman and Michel Rauchs at Cambridge University.

    China

    About 58% of the world’s large cryptocurrency mining pools were located in China, followed by the US at 16%, the researchers said. China is the biggest producer and consumer of coal, and server farms in provinces such as Xinjiang, Inner Mongolia and Heilongjian are heavily reliant upon the fuel.

    Estimates of how much electricity goes into making cryptocurrencies vary widely — from the output of one large nuclear reactor to the consumption of the entire population of Denmark. But analysts agree that the industry’s power use is expanding rapidly — especially after a price rally that made bitcoin almost four times more valuable than just three months ago.

    Total electricity use in bitcoin mining has increased by 30% in the past month, according to Alex de Vries, a 28-year-old blockchain analyst for accounting firm PwC.

    “The energy consumption is insane,” said de Vries, who started the Digiconomist blog to show the potential pitfalls in cryptocurrency. “If we start using this on a global scale, it will kill the planet.”

    Some analysts dismiss such claims as overly alarmist, noting that even the high-end estimates of demand account for only about 0.1% of what the world uses. Advances in technology also may make operations more energy efficient.

    Still, it’s getting more expensive to produce cryptocurrency as the energy use of the process rises. Miners — especially the big ones — will look for the cheapest power to better weather price volatility, according to the Cambridge study. Electricity costs in China, which has surplus capacity of coal-fired generators and vast reserves of the fuel, is well below what consumers pay in the US or Europe.

    If you’re investing in a bitcoin rig, you have to look at the long term, and with the volatility as high as it is, it’s probably still doesn’t make sense to mine bitcoin in Europe

    Bitcoin’s algorithm dictates that after a certain number of tokens are created, more work is required for the next batch, said James Butterfill, the head of research and investment strategy at ETF Securities in London who has been studying cryptocurrency markets.

    Using estimates of electricity prices and the rising speed with which calculations must occur, Butterfill estimates the marginal costs of each bitcoin will more than double from $6 611 in the fourth quarter to $14 175 in the second quarter of 2018. At the start of 2017, the cost was $2 856. With costs rising, there’s a greater risk for miners should prices tumble.

    “You’d be hard-pressed to find anywhere where it isn’t profitable to mine,” said Butterfill, who set up computers at his home in England to mine tokens in his spare time and joined a network of 120 000 others to boost processing capacity and returns. “But if you’re investing in a bitcoin rig, you have to look at the long term, and with the volatility as high as it is, it’s probably still doesn’t make sense to mine bitcoin in Europe.”

    Not all cryptocurrency mining is dirty. Computers in Iceland get power from geothermal plants. Even in China, some are clustered around hydroelectric facilities in Sichuan and Yunnan.

    In Austria, Hydrominer IT-Services put servers inside hydro-power plants. It was the cheapest option, said Michael Marcovici, a company founder, who began mining in 2013.

    “Frankly, we didn’t start this as an environmental project,” Marcovici said. “It is bad for bitcoin to have this news all the time about this dirty energy. People don’t want dirty energy to be used. But the problem is, in Europe, the energy is just too expensive.”  — Reported by staff reporters, with assistance from Hayley Warren, (c) 2017 Bloomberg LP

    Follow TechCentral on Google News Add TechCentral as your preferred source on Google


    Bitcoin top
    WhatsApp YouTube
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email Copy Link
    Previous ArticleMatshela Koko gets his job back at Eskom
    Next Article War of words erupts between Huawei, ex-partner

    Related Posts

    Treasury moves to bring crypto under exchange-control rules

    Treasury moves to bring crypto under exchange-control rules

    25 February 2026
    Bitcoin faces another reckoning

    Bitcoin faces another reckoning

    6 February 2026
    Crypto markets reel as bitcoin slides

    Crypto markets reel as bitcoin slides

    5 February 2026
    Company News
    Households still under big pressure, Altron Fintech index shows

    Households still under big pressure, Altron Fintech index shows

    13 March 2026
    How AI is changing the way we work - Angela Ho, Obsidian Systems

    How AI is changing the way we work

    12 March 2026
    Domains.co.za introduces complete domain protection service

    Domains.co.za introduces complete domain protection service

    12 March 2026
    Opinion
    South Africa's energy future hinges on getting wheeling right - Aishah Gire

    South Africa’s energy future hinges on getting wheeling right

    10 March 2026
    Hold the doom: the case for a South African comeback - Duncan McLeod

    Apple just dropped a bomb on the Windows world

    5 March 2026
    VC's centre of gravity is shifting - and South Africa is in the frame - Alison Collier

    VC’s centre of gravity is shifting – and South Africa is in the frame

    3 March 2026

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Latest Posts
    Post Office on the brink of collapse

    Post Office on the brink of collapse

    13 March 2026
    New policy direction targets South Africa's municipal broadband logjam - Solly Malatsi

    New policy direction targets South Africa’s municipal broadband logjam

    13 March 2026
    How electronic warfare is threatening ships and their crews

    How electronic warfare is threatening ships and their crews

    13 March 2026
    Rand slumps for second week

    Rand slumps for second week

    13 March 2026
    © 2009 - 2026 NewsCentral Media
    • Cookie policy (ZA)
    • TechCentral – privacy and Popia

    Type above and press Enter to search. Press Esc to cancel.

    Manage consent

    TechCentral uses cookies to enhance its offerings. Consenting to these technologies allows us to serve you better. Not consenting or withdrawing consent may adversely affect certain features and functions of the website.

    Functional Always active
    The technical storage or access is strictly necessary for the legitimate purpose of enabling the use of a specific service explicitly requested by the subscriber or user, or for the sole purpose of carrying out the transmission of a communication over an electronic communications network.
    Preferences
    The technical storage or access is necessary for the legitimate purpose of storing preferences that are not requested by the subscriber or user.
    Statistics
    The technical storage or access that is used exclusively for statistical purposes. The technical storage or access that is used exclusively for anonymous statistical purposes. Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you.
    Marketing
    The technical storage or access is required to create user profiles to send advertising, or to track the user on a website or across several websites for similar marketing purposes.
    • Manage options
    • Manage services
    • Manage {vendor_count} vendors
    • Read more about these purposes
    View preferences
    • {title}
    • {title}
    • {title}