Companies that mine cryptocurrency can consume up to a percentage point of all Estonian electricity consumption at peak periods.
Nordcoin Mining manager Hermes Brambat told ERR that their consumption is close to 1.5 MW and there could be some 10 companies in Estonia with comparable consumption. Estonia's total peak consumption in a colder winter month is close to 1,500 MW, meaning cryptocurrency mining makes up a percentage point of all consumption at peak periods.
Critics may claim that electricity goes to waste, but Brambat does not agree. "Perhaps networks are overburdened in some countries such as Kazakhstan and that may cause problems in everyday life, since they can no longer get electricity in their homes. The issue in those countries is illegal mining and the local bureaucracy. Here, mining is more of a hobby and niche topic. Most crypto miners move to countries such as Ukraine, Georgia and Russia. No reason to go looking for issues in the light of Estonia's energy crisis," the cryptocurrency mining business manager said.
Mining is necessary for cryptocurrency to remain stable - even just for transactions.
Tallinn University of Technology information technology professor Tanel Tammet said mining Bitcoin is a braking mechanism for the entire cryptocurrency system. "In principle, what Bitcoin mining does is trying to make it so there is less Bitcoin coming in. It is an artificial brake system built into the mechanism to make it do pointless work. It is almost like putting your handbrake on and driving with it on the entire time. It is a a wasteful mechanism in principle," Tammet said.
Although at current energy prices, crypto mining does not pay, miners have not stopped. "They take yearly averages and not months. People will not go turning of their equipment and selling in panic yet. They are hoping for prices to normalize in spring and still getting a reasonable yearly average," Brambat said.
The crypto miner added that it is not consumption that is the issue, but rather wasteful production. While Bitcoin is the most common cryptocurrency, there are so many other virtual currencies. To save energy, some of those currencies are based on a proof of stake mechanism.
Tammet said cryptocurrencies are likely to find more applications as time goes on. "I cannot say which applications for now, but I am sure they will be significantly more popular than now. Proof of stake mechanisms exist and they use drastically less electricity. They also work faster in some cases. Bitcoin is just so much more dominant in terms of investing, other currencies are smaller. Bitcoin will likely remain as an investment measure, it is not built for everyday use," the TalTech professor said.
Editor: Kristjan Kallaste