Bitcoin analysis for 18/05/2018

Economist Alex de Vries, who published the article «Bitcoin’s growing energy problem» in the scientific journal Joule, told the financial media, that mining Bitcoin will consume 0.5 percent of world energy by 2018.

De Vries concludes that because the Bitcoin network currently consumes about 2.55 GW of electricity and is heading towards 7.67 GW in the future (for reference, Ireland consumes 3.1 GW and Austria 8.2 GW), the network has a big problem, which is growing fast. However, he also notes that solutions such as the Lightning Network can ease the situation.

Extracting Bitcoins requires energy to perform calculations, which in turn give the miners an award in the form of Bitcoin. In mid-February, it was reported that in 2018, Iceland’s cryptographic output would absorb more electricity than households. The debate over whether Bitcoin mining is excessively harmful to the environment is perceived by some as irrelevant due to the high demand for Bitcoins in some countries. «Half a percent is quite shocking. […] This is an extreme difference compared to the ordinary financial system, and this growing demand for electricity will certainly not help us achieve our climate goals» — De Vries said.

He hopes his article will initiate talks on this topic because he thinks the world needs «more scientific discussions about where this network is going.»

Let’s now take a look at the Bitcoin technical picture at the H4 time frame. The wave a of the corrective cycle has been made and the low was established at the level of $7,900, so now it might be a good time to start a short-term corrective pull-back in the wave b. Nevertheless, to complete the correction there is still the wave c missing and the projected target for this wave is seen at between the levels of $7,712 — $7, 442.

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