by Kenneth Schortgen, Shotgun Economics:
There have been some analysts on Wall Street, as well as a large portion of the cryptocurrency community, who believe that Bitcoin can and is the new replacement for gold as a store of wealth. However in a new study out on Nov. 5, data is showing that the energy cost right now to mine a single Bitcoin is three times greater than the amount of energy required to mine physical gold, and that this will only increase as the Bitcoin algorithm demands more and more energy for each new token.
According to newly published research, mining cryptocurrency takes nearly twice as much energy than mining gold, platinum, and copper. Bitcoin $BTC▼0.19% on its own, needs three times as much energy to mine than compared to gold. Researchers from the Oak Ridge Institute for Science and Education in Cincinnati tracked the daily energy demand and hashrate of Bitcoin, Ethereum, Litecoin, and Monero between 1st January 2016 to 30th June 2018. The researchers then used the average daily market prices of each cryptocurrency – and the respective rewards gained from successfully mining a block – to calculate how much energy it takes to generate one US dollar worth of each respective cryptocurrency. The study found that Bitcoin, Ethereum, Litecoin, and Monero consumed 17, 7, 7, and 14 million joules of energy, respectively, to mine $1 worth of each cryptocurrency. – The Next Web
Ironically this ‘proof of work’ asset is right now around five times the market value of gold, meaning for the moment it does provide a higher yield than gold does at $1230 per ounce. But as we mentioned above, each Bitcoin mined subsequently causes the amount of energy needed to mine the next one to increase, meaning that in a very short amount of time that difference will tilt in favor of gold unless the price of Bitcoin grows in proportion to the increased energy costs.