There is a whole range of arguments on bitcoin and unsustainability. It is highly unlikely that the bitcoin will fall out of favor due to its model than other external factors like government intervention, lack of adoption etc.
Apart from the block size debate and increasing concerns about centralization of the Bitcoin network, the increasing power and hardware requirements for bitcoin mining is one issue that is being raised by a part of Bitcoin community and bitcoin skeptics. During the initial days, bitcoin mining was a perfectly democratic task which involved usage of CPUs. However, an overlooked flaw in the bitcoin algorithm made mining possible with more powerful hardware like GPUs, FPGAs and the beastly Mining ASICs.
Mining has now become a numbers game where only those with funds to adopt the latest and most powerful mining rigs can mine profitably. This has of course led to creation of huge data centers capable of churning out processing power in terms of hundreds of petahashes. These datacenter with their huge processing power command a considerable share of Bitcoin network (by prioritizing the transactions to process).
‘Devices with great processing power comes with great energy requirements’ and energy is not so cheap. Some consider that participating in mining operations at the expense of so much electricity required to run miners and keeping them cool at the same time is not worth it. A quick calculation on the back of a paper napkin shows that at current scenario anyone with an AntMiner S7 bitcoin miner can possibly mine 1.5 bitcoins a month at a cost of $80/bitcoin (energy costs). At a current price of $450/BTC it is still profitable.
Running a single miner and a data center are 2 completely different cases. Data centers have a greater cooling requirement and hence more power consumption. It is assumed that increase in processing power will increase the energy requirements. On the contrary, newer devices are more energy efficient than their previous counterparts, greatly reducing the cost of operation to hashing power ratio. In addition to improved hardware mining companies are now establishing their datacenters close to polar region eliminating cooling requirements.
Cost of electricity is expected to increase as the demand is bound to increase in the future. At the same time, development in alternative energy sector offers a promising outlook to increasing future energy needs. Depending upon the location of data center, Solar, Wind and Geothermal energy sources offers attractive and cheaper alternatives for both mining companies and general public alike. Investments in alternative energy early on will help reduce costs involved in mining, making it more profitable.
Solar cells are now more efficient than it was a year ago and it will continue to improve. Harnessing solar energy is within reach for both individuals and companies. By doing so, they can reduce their dependency on grid, in turn reducing energy bills. However, it calls for an initial investment, which they can break-even in a couple of years.
As the trend continues, we can expect bitcoin industry to turn more energy efficient and sustainable in near future. It also makes mining more profitable for individuals to get back into the game.