Bitcoin Mining Council quarterly report: The state of Bitcoin mining
The organization released its findings on Bitcoin mining’s energy consumption and power mix, obtained through a survey. The results are positive and promising towards an ever-greener Bitcoin network.
The BMC gets down to business
During their first public meeting on Twitter Spaces, the forum led by Michael Saylor left no doubt about their true purpose. To spread information about Bitcoin mining energy consumption and educate the public, which in turn fights negative, misinformative media narratives. Naturally, they committed themselves to release quarterly reports reviewing the global mining landscape.
Now, a couple of weeks after the event, the first report has come out. Michael Saylor broadcasted live on YouTube (which you can watch right here) for more than 12,000 people and explained everything there is to know about the data their findings. So let’s break it down a bit, shall we?
Putting the numbers together
At the beginning of the presentation, Saylor explained that they collected the data from 23 mining companies that voluntarily signed up to take a survey. These companies, which include founding members of the council, make up 32% of the Bitcoin mining network global hashrate. A pretty impressive sample, to be honest.
The survey included energy-related questions about mining, such as:
- Estimate of their hashrate.
- Estimate of their energy consumption.
- Percentage of sustainable energy used — renewables, nuclear, and carbon credits obtained by the company.
The organization then aggregated all data obtained, keeping the sources anonymous. Then, they presented it to energy professionals and experts — both within and without the BMC — to calculate the results and compare them to other industries.
Results that speak for themselves
The report begins with a powerful summary that already disavows some of the most popular FUD arguments from naysayers. It reads: “Bitcoin mining uses a negligible amount of energy, is rapidly becoming more efficient, and is powered by a higher mix of sustainable energy than any major country or industry.”
The investigation shows that the network’s power usage is insignificant compared to the world’s total consumption. To be precise, Bitcoin mining uses ~0.117% of the global energy, which is around 189 TW/h. Very far from China’s 39,361 TW/h. Even more so, the entire hashrate could run on merely 0.4% of the world’s wasted energy due to inefficiencies. Bitcoin could actually help the power grid be more efficient while producing wealth in the meantime.
Of course, this doesn’t change the fact that Bitcoin uses more energy than some countries, but that only means that those countries’ energy consumption is just as insignificant as Bitcoin’s at a global level.
Furthermore, the study also proved wrong the argument about Bitcoin using energy from fossil-fuel sources. Results showed that 56% of the electricity mining uses comes from renewable sources, which is higher than any other country or industry in the world. This is a no-brainer, actually, since this kind of energy tends to be the cheapest. That is also the reason why miners are always looking to turn to renewables for better profits.
Trending towards green
Another promising finding of the BMC’s study is not about where we are today, but the difference with where we were a couple of months ago. As we predicted, the miners’ exodus away from China profoundly impacted the Bitcoin mining landscape. Pretty positively too, might we add.
Indeed, when comparing Q1 and Q2 2021, you can see an apparent increase in network efficiency (15%) and sustainable energy usage (52%). The latter is due to miners switching to cheaper and cleaner power sources. The former, according to Saylor, has to do with replacing obsolete mining hardware with new, better machines.
There’s reason to be optimistic about the future, as data shows the network is moving toward greener and more efficient mining methods. Hashrate from China hasn’t fully migrated yet, and new locations are pushing initiatives to become more attractive for miners, so it’s expectable to see this trend continuing in the future.
Limitations of the BMC study
Although the results are positive and promising, it can’t go without mentioning that it falls short in a couple of aspects.
The first thing that comes to mind is the current state of Bitcoin’s hashrate. We’ve mentioned above that Chinese miners haven’t finished migrating yet and, although the trend seems to be positive, it still represents a blind spot for the study. As we said, we can expect that they’ll follow other miners looking for cleaner alternatives, but we won’t know for sure until they’ve settled down.
The same goes for the unsampled hashrate. 32% is a more than acceptable sample, but it doesn’t change that more than two-thirds of the global miners didn’t take the survey. That means that a significant portion of the results is estimated (based on accurate information and professional analysis, but still estimated).
We won’t see a proper breakdown of the Bitcoin mining industry until the waters calm down and hashrate recovers from the almost 50% drop it suffered after China’s crackdown. That said, we should take the report with a grain of salt.
Nevertheless, that doesn’t mean this isn’t promising. Firstly, because the BMC seems to be serious about its purpose and already shows its diligence with the cause. Secondly, because even though it isn’t entirely representative, 32% is still a significant portion of the global hashrate. Knowing that one-third of the Bitcoin network obtains more than half of its energy from renewable sources is excellent news.
In addition, we’re confident that the report’s findings on the trend we are following will gain strength, and that surely, the following quarterly report will show it in its results.