Why aren't people mining cryptocurrencies

Cryptocurrency value: Bye, Bitcoin

The cryptocurrency is flying high again - due to weak interest rates and a pandemic. It is becoming less and less usable for its actual purpose.

A key with a certain amount is included on the Bitcoin coins Photo: YAY Micro / imago

Actually, cryptocurrencies like Bitcoin are a really good idea. They cheat the banks, who like to allow themselves the maximum possible number of days for transfers and still charge high international fees. They show data collecting services like PayPal, which create their own rules, the middle finger. And they allow, to a certain extent, a bit of anonymity. It has also become gold dust on the Internet.

The fact that you can now easily buy a small car for a Bitcoin is therefore bad news. Because the new highs of the digital means of payment - at the weekend it rose to 34,800 US dollars, then fell below 30,000, only to rise again - is a symptom that there is not much left of the good idea of ​​a crypto currency. Process the monthly transfer to the cousin in Venezula via Bitcoin? Pay for the surfboard in the Hawaiian online shop with Bitcoin? Is simply not practical with such price fluctuations.

Bitcoin has degenerated into an object of speculation, and so have some other cryptocurrencies. There are of course reasons for this: One of them is that traditional investments have become increasingly unprofitable in many parts of the industrialized world. At the same time, Bitcoin has made it out of its dirty corner - darknet, drugs, money laundering.

The banks and PayPal themselves have also contributed: Financial institutions have set up funds with crypto currencies. PayPal has enabled US customers to purchase items since October. And now there's the pandemic: Governments are putting together rescue packages, investors: depending on the constitution, there is a fear of inflation or deflation, and those who find gold too old-fashioned are betting on Bitcoin. Or Litecoin or Ether or one of the other several thousand cryptocurrencies, some of which are currently at record levels.

Extremely high power consumption

But otherwise the Bitcoin in its current form is no longer up-to-date. This is due to the power consumption. It cannot be calculated exactly, and it fluctuates greatly. But researchers at Cambridge University currently estimate it to be a good 100 terawatt hours, extrapolated over a year. That is roughly the same as the annual consumption in the Netherlands.

The high power consumption is so deeply anchored in the blockchain DNA of Bitcoin that nothing can be changed about it. Finally, the computers have to search for certain hash values ​​in order to carry out the transactions. The difficulty of this search increases with the global computing power. The concept is called Proof of Work. It should prevent an actor from being able to control the currency.

There are more ecological concepts

There are concepts for more ecological cryptocurrencies. Ether, for example, wants to get rid of the proof of work and switch to a different model. The blockchain - the chain that secures the transactions - should be protected from manipulation by a complex system of validators: inside. Other cryptocurrencies are aimed at operators of solar or wind power plants. Renewable energies should be promoted at the same time.

There is a good chance that the Bitcoin rate will crash again. Not necessarily because it has already been the case with the previous record highs, most recently in 2017. But because when the economy recovers or interest rates rise, cryptocurrencies become less interesting again. But as long as the susceptibility to speculation remains, a different idea is needed for fast, independent, perhaps even anonymous payment.