How much does it take to mine 1 bitcoin?

Learn how much power it takes to mine one bitcoin. Also, fracking becomes a big and controversial topic in the US but he US government only cares about sending jobs to China.

Mining Bitcoin – The Numbers

Precious metals like gold and silverare traded in ounces while cryptocurrencies are traded in coins. The gold market trades about $7.5 billion per day and the gold itself is about $80 billion. The market cap of $92% ($75,000,000,000 / $80,000,000,000) is 85%. The cryptocurrency market cap is close to $85 billion with about 16,700 bitcoins goingaround each day. This means the cryptocurrency market is trading close to $2.5 billion every day. In contrast, the gold market is trading about $1.5 billion per year. The cryptocurrency market is trading about 18% of the gold market. So, with gold being worth over 100 times that of bitcoins, you would expect thebitcoin market to be trading 6% to 8% of the gold market. That is not the case. The bitcoin market is 2 times bigger than the preciousmetals market and 7 times bigger than the silver market.

Note: This article uses a value of $2,500 per BTC. That price is valid at the time of writing this article, however, the value changes significantly. For example, on November 15th, 2017, one BTC was worth close to $6,400. Keep this in mind when reading the statistics and comparing the numbers with the value of gold.

All that said, let’s dive deeper and take a look athow many dollars that value represents. The US government’s official statistic is: “As of June 2018, the average U.S. retail price of gasoline was $2.65 per gallon.” Using that as the baseline, how many gallons (or liters) of gas does it take to generate $500 in profit? Consider that there are roughly 620,000,000 people in the US with 300,000,000 cars. That comes out to 1.3 cars/person and 130,000,000cars. At $2.65 per gallon, that means it would cost $4.35 billion dollars to drive all those cars for one whole year. That’s enough gas to drive 130,000,000 limos for one whole year. Meanwhile, only $4.35 billion dollars is being spent on gas due to the current oil price war. That estimate puts the cost ofgas at $7,000 per barrel. ($4.35 / 6,000,000,000 / 1,000). Now, the price of a Bitcoin is $2,500. So, using the above calculation, it would take 13 barrels of crude to find a Bitcoin. ($6,000 / 2,500). So, we can easily see that a gallon of gas is worth 22.5 barrels of oil. In other words, mining 25 Bitcoins is like driving 25 limos for an entire year.Just to put this in perspective, you could fully fuel 25 limousines for 2.5 years for only 2.5 Bitcoins.

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22.5 Barrels of Oil for 25Bitcoins

Fracking

It turns out that fracking is a much bigger and potentially more irresponsible use of electricity than miningbitcoin. According to the Bureau of Labor Statistics, the average American uses 10,812 kWh per year. If we multiply that by 25, we get 259,200 kWh. At the national average cost of $0.11 per kWh, mining 25 Bitcoins would cost $2,520. On the flip side, fracking 25 wells for natural gas would only cost $2,520. So, let’s do some groovy math and assume a worst-case scenario. Let’s look atthe amount of electricity required to mine 25 BTC compared to the amount of electricity used to drill 25 natural gas wells. (25 / 25). That comes out to 1, or 100%. That means, if you were to actually use as much electricity as you would use to drill 25 natural gas wells, you would still be left with the same amount of Bitcoin you started with. So, that’s good news for Tesla, right?

25BTC Compared to Natural Gas Wells

Conclusion

This just proves that while bitcoins may be worth a lot of money, they are not actually that hard or expensive to make. In fact, it is unlikely they would even be rare even if we tried tomake as many as possible. (There would be no coal, no oil, no gas, etc.). This basically negates the whole value proposition of cryptocurrencies.

With all of this being said, the ability to print money non-stop without any intrinsic value is the reason why inflation and currency devaluation is so dangerous. Fiat currencies are simply pieces of paper with ink printed on them. Governments can decide when to print more money and when to hand out more cash. A country with a central bank can simply lowerthe interest rates and print more money. This allows government to print more and more money and buy more and more debt. The process is called “inflation”. When inflation starts raising, the government has to devalue their currency. They have to lower the buying power of that currency so the same amount of money will earn less money. That process is called “currency devaluation”. It is a painful and slow process that usually happens over time. However, a government can speed up the process by printing too much money. In 2008, for example, the US government tried to stop the housingmarket meltdown by printing a ton of money. They pumped billions and even trillions of dollars into the system. The result was a “currency devaluation” of the dollar. It took about 10 years of the dollar losing half of its buying power. Cryptocurrencies are an interesting concept, but they simply won’t solve the big problems we face today. They will just complicate the system and create more problems. That isfor now, but who knows what the future will bring? Maybe in the future, governments will figure out how to make elastic “crypto-currencies” that expand and contract like a digital universe. For now, though, it would be best if everyone remembered to stick to the old saying: “Money doesn’t grow on trees.”

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Dannie Jarrod

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