Tackling the Bitcoin energy consumption debate
Bitcoin is often touted as a complete waste of energy and therefore a climate emergency, while it does use a lot of electricity the exact number is not easy to accurately calculate as we’ll discuss later. Bitcoin also makes for an easy target as its energy consumption can be estimated from its publicly available hashrate. In reality energy consumption is not a bad thing at all, in fact it is a marker of how advanced a civilization is as proposed by the Kardashev scale. As humans have progressed we’ve used more and more energy to power our ever increasing number of devices.
To think that in the future we’ll be using less energy is ridiculous. We’ll have more devices with more compute potential that will require more power, this despite each device becoming more efficient. The idea though is that we’ll move from dirty sources of power to clean and sustainable sources that don’t emit CO2 and other possibly harmful gasses. One day even potentially harnessing the energy of whole planets to power our stellar civilization through Dyson spheres.
Bitcoin does not require the use of fossil fuels to operate unlike the internal combustion or jet engine for example, Bitcoin can and will eventually run on pure renewable power. This is just not the case at the moment as renewables are not reliably and widely available as of yet. Available electricity sources and their cost base are generally up to the government in most cases so don’t blame Bitcoin miners blame your government for not adding more renewables. Miners also aim to operate as efficient as possible in order to maximize profits which in other words leads to the development of new private solar farms and ingenious energy waste reduction methods such as using flared gas to power mining rigs.
Generally the argument comes down to whether you think Bitcoin is a good use of energy or not, this is subjective and as you’ll see there are a lot of uses of energy that some may classify as more wasteful than a global decentralized money network. Bitcoin uses 0.6% of the worlds electricity consumption¹, certainly a lot but I’m sure the alarmists would have you believe it’s much more than that. Bitcoin consumes more power than Argentina, Ukraine and almost as much as Sweden. Yes this is true though this energy is used to secure over $1 trillion in value, when compared to the GDP of these countries it makes for a less sensationalist headline. Argentina $445b, Ukraine $154b and Sweden $531b. If you wanted to make a point with this data you could cheekily say Bitcoin is 2.24x, 6.49x and 1.88x more efficient than these nations.
Adding to the above, China the worlds largest consumer of energy currently uses 49.5x the energy of Bitcoin despite only having a GDP 14.3x of Bitcoins market value. The scale below also puts into perspective how irrelevant Bitcoins energy use really is when compared to that of the worlds countries, and this is using CBECI’s conservative estimates of Bitcoins energy consumption.
Now for a few comparisons of energy use around the world, Daniel Barr made a rough calculation comparing Bitcoins use to clothes dryers. He found that dryers in the USA alone add up to 72% of Bitcoins energy use at 130TWh per year. Clothes dryers are arguably a modern day comfort feature and you can use zero electricity to dry your clothes by hanging them out in the sun or even inside and waiting a little longer. If you were to be hyper efficient with your energy usage you could mine bitcoin to earn money from home negating your need to travel to work, then use the heat produced for your home if you live in a cold climate or/and dry your clothes with this heat as well.
Another arguable comfort feature of the modern world is air conditioning, we’re not talking about heating or refrigeration as they are arguably necessary for modern day survival. There’s no doubt we use excessive air conditioning in our mega offices and shopping malls to keep us slightly cooler than otherwise. This air conditioning uses a vast amount of electricity in fact it’s roughly 10% of the worlds total energy consumption, that’s 2231.5TWh per year!² ³. This is even more so a waste when you realize humans have survived and thrived through millennia in many hot climates without air conditioning. It’s even more possible to live without it today if we focused on building well designed structures using a variety of methods that can keep the inside cool without electricity⁴.
Did you know how much power your on but idle devices at home use? Not much by themselves but combined together it’s a ridiculous amount. CBECI estimates in the USA alone these idle devices consume as much as 58% of Bitcoins network and this is using a source from 2015, surely this has only risen since then as we’ve increased the number of at home devices from Alexa to Ring. This is also just in the USA, add the rest of the developed world and you’ve well exceeded the Bitcoin network just by leaving your devices on idle at home.
The above data from the CBECI may also not be entirely accurate as mentioned by a few researchers, to be fair they do provide a range as a result of this estimation. This estimation problem lies not with the hashrate itself as this is visible to all but with the actual devices producing that hashrate and their respective power draw. To calculate which ASIC models are contributing to the current hashrate is an estimate at best and as these devices get more efficient with each iteration a thorough analysis is required or you’ll end up with a large range like CBECIs data. Coinshares research tackled this exact problem by collecting data relating to ASIC models produced in excess of 1000 units, total deployment numbers, average purchase prices and batch sizes of production. They came to the conclusion that Bitcoins network used 41TWh, much lower than CBECI’s median estimate of 130TWh⁵.
The worlds PS4s, Xbox Ones and Nintendo Wii Us use more power than Bitcoin per year.
This lower figure makes the above comparisons using CBECIs data over 3x better for Bitcoin believers or 3x worse for the narrative that Bitcoin is a consumption hog. They then compare this to the 85m PlayStation 4, 40m Xbox One and 15m Nintendo Wii U consoles around the world estimating an average 4 hour play time per day and 20 hour idle using a 40" TV to play on. Together this draws 4.9GW⁶ or 42.9TWh per year which is more than the Bitcoin network uses to secure $1 trillion in value. This is assuming all these devices stay plugged in of course but it does not include the older generation devices still in use and desktop gaming PCs that would add significantly to this figure. Do you think gaming is a waste of energy? Some would say yes but many others would say no.
The point of this article is not to point the finger and say we should stop doing this or that, a “good” or “bad” energy use is subjective and not unanimous among everyone in the world. The point is to push back on unsubstantiated claims and add clarity to Bitcoins energy usage figures as the media would have you believe it’s much worse than it really is. Besides who gets to decide what we should and shouldn’t do with energy produced? Shouldn’t the free market decide this?
[1] Cryptocurrency and Blockchain Programme Team, Cambridge Bitcoin Electricity Consumption Index
[2] IEA, The Future of Cooling (2018)
[3] IEA, Electricity Information: Overview (2020)
[4] A. Julien, How to keep buildings cool without air conditioning — according to an expert in sustainable design (2019)
[5] C. Bendiksen & S. Gibbons, The Bitcoin Mining Network (2019), Coinshares
[6] C. Bendiksen, Beware of Lazy Research (2018), Coinshares
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