Gold and Bitcoin both involve mining, and the two options, equally regarded as the safest havens at a time of economic instability, have attracted scepticism and support alike.
One of the things that has typically piqued curiosities in the global financial debate is the total amount of existing gold or Bitcoins to be potentially mined. The supply of Bitcoin is fixed at 21 million, Newsweek wrote, noting that a worldwide network makes it available at low cost to anyone interested.
As for gold, there are about 197,000 tonnes of the precious metal above ground, with the lion’s share of it – up to two-thirds – having already been mined since 1950.
Although it’s impossible to know how much gold lingers under water, the National Oceanic and Atmospheric Administration has measured there is about one gram of gold for every 100 million metric tonnes of water in the Atlantic and Pacific.
There isn’t yet a cost-effective way to extract gold from seawater or mine it from the ocean floor and make a profit, but the existing data on the costs of usual gold mining suggests it’s still more cost-effective to extract gold, than mine energy-consuming Bitcoins on computers.
$973 is the cost of mining an ounce of gold, and it costs $4,161 to mine one Bitcoin on a computer, industry figures show as cited by Newsweek.
Gold, however, also has to be transported and stored, which also carry a price tag – unlike Bitcoins, which freely move around the world, with the help of the secure distributed ledger technology of blockchain.
Experts have been wondering if cost-effective ways of extracting gold from the seafloor are ultimately found, will an increase in gold supply lower its price, and if so, could gold become an obsolete store of value, given that the dollar for instance, hasn’t been backed by gold since 1971.
Bitcoin’s proponents argue that the cryptocurrecy might later fit the role, suggesting traditional methods of establishing value — earnings, expenses, profits, etc. — don’t apply to the cryptocurrency. The digital money, which now exists alongside fiat currencies, is a network, and just like social networks, the more people use the service the more valuable it becomes to the whole community, serving as a new store of value, Bitcoin backers note.
As of Friday, Bitcoin was trading at $59.378.71, with analysts suggesting the cryptocurrency, which has grown by over 100% in the past year, may soon hit its record high of $61,556.59. This comes despite the claims that the Bitcoin mining industry is enormously energy-intensive and damaging, currently at 120 TWh (Terawatt hours per year), which is equals to a small country.