Cover Image Source – Digitally re-mastered by the author

Since antiquity, people associated volcanoes with their socio-religious belief. Volcanoes were worshipped in many places and people threw all sort of things into the fire of volcanoes to appease them. Throwing cattle into volcanoes were popular practice and cow was a very common animal to be sacrificed. Indonesia’s Mount Bromo is a famous volcano. The local villagers still follow such rituals there. Every year, during some auspicious days, they climb up the mountain and throw different kind of things like fruits, vegetables and cattle into the fire even today. They believe it will ensure good harvest, health and eruption free years. Sounds ridiculous? May be. What a destruction of wealth!

Image Source – Worshipers gather at Mount Bromo

World has obviously changed. Hardly, we sacrifice cows or cattle like this nowadays except a few exceptions. But are we sacrificing our wealth in a different way? It is the era of blockchain and cryptocurrency now. Satoshi Nakamoto gifted us the first cryptocurrency called ‘bitcoin’ in 2009. Since then, bitcoin has become an important factor in the economy although it is not a formal currency anywhere. Popularity of bitcoin has grown tremendously since its inception and global trading is taking place everywhere. Bitcoin works with ‘proof of work’ mechanism and miners get reward in newly generated bitcoins by solving complex mathematical problems. Miners are also rewarded for validating transactions by providing computing power to the network. Bitcoin mining caught the attention of many people and institutional players. Now, mining consumes high electric energy and leaves carbon footprints. So bitcoin mining has high economic cost. Bitcoin mining is consuming 0.32% of the world’s electricity consumption now tentatively. Bitcoin mining consumes more electric power than many big nations. A country like Austria or Columbia consumes less electric power than bitcoin mining which is taking place all over the world.

Here is a link to check some important facts about energy consumption in bitcoin mining. The above images are sourced from there.

Image Source – A construction worker walks past a giant bitcoin mining equipment in Quebec

So bitcoin consumes a lot. The cost to the economy is enormous. Satoshi might have created a mighty volcano also besides creating bitcoin and we are throwing our cows into it. Mining is the modern metaphor of volcano! We have started to appease it by destroying our wealth! This is a big reason behind generation of so many ‘proof of stake’ mechanism projects. Two of industry’s top projects like ethereum and cardano are scheduled to be re-launched with more energy efficient ‘proof of stake’ networks in 2020. Ethereum cofounder Vitalik Buterin sees ‘proof of stake’ as the driver for maturity of ethereum. There is no mining in ‘proof of stake’. It is more like distributing the cow to the society rather than throwing it into the volcano!

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