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According to the Bitcoin Mining Council

Bitcoin mining is more environmentally friendly and energy efficient than any country in the world

Michael Saylor presented the latest quarterly report on Bitcoin’s energy usage

Back in July, Michael Saylor held the first Bitcoin Mining Council (BMC) meeting on Twitter Spaces. There, he committed to gathering Bitcoin mining data and publishing quarterly reports about energy consumption and mix. Here are the key takeaways of their second release.

Photo by Executium on Unsplash

About the Bitcoin Mining Council

In the words of Michael Saylor, the BMC is “a voluntary association of Bitcoin miners who came together to educate the public and gather some insight about the Bitcoin mining business and how energy is used.”

The organization currently consists of 29 different companies representing ~33% of the entire Bitcoin network’s hashrate. The results shown in the report are thus an estimate based on a sample of one-third of the total miners.

Key takeaways to get started

The report claims that:

  • Bitcoin mining uses a negligible amount of electricity on a global scale.
  • It is also rapidly becoming more efficient in terms of energy.
  • Bitcoin miners’ energy mix is more based on sustainable sources than any other country or industry globally.

These three conclusions are drawn from the data collected by asking a straightforward survey composed of three questions:

  • How much electricity does your total fleet consume today?
  • What is the total percentage of sustainable electricity within your fleet’s power generation mix today?*
  • What is the total aggregate hashrate of your fleet today?

*Sustainable electricity is defined as hydro, wind, solar, nuclear, geothermal, and carbon-based generation with net carbon credits.

“The amount of energy that Bitcoin mining uses is a rounding error for every other major industry.”

— Michael Saylor.

That said, let’s further dive into the BMC’s report and analyze the data they’ve collected.

Bitcoin mining energy consumption

The first point emphasized by the report is how insignificant Bitcoin mining energy usage is compared to the total global energy produced.

According to the BMC’s findings, Bitcoin mining uses 188 TW/h. That means that all Bitcoin mining operations worldwide are running on 0.12% of the world’s total energy production. Most importantly, they could be powered by a mere 0.38% of the world’s wasted energy due to inefficiencies.

Source: Bitcoin Mining Council.

The data is even more impactful when compared to single countries like the United States. According to the report, around 65% of the energy produced in the United States is lost or wasted.

In that scenario, the entire Bitcoin network could run on 2.8% of the United States wasted energy only. This shows not only how trivial Bitcoin energy consumption is, but its potential for countries like the US to become more energy efficient.

Source: Bitcoin Mining Council.

Energy mix: Does Bitcoin use sustainable energy?

Another focal point of the energy debate surrounding Bitcoin is its environmental impact and carbon footprint. Many mining opposers who argue against it claim that Bitcoin runs mainly on fossil fuels and other pollutant energy sources.

However, the BMC’s report points to the contrary. According to their data, Bitcoin mining energy mix comprises more renewable, sustainable sources than any major country or industry worldwide.

The report states that the mining corporations that make up the BMC use 65.9% of renewable energy to power their mining operations. It also estimates that the network as a whole is a little less green, using precisely 57.7% renewables, which is still better than any country.

Source: Bitcoin Mining Council.

“Bitcoin mining is not just more sustainable than any country. It’s also a more efficient use of energy, and it’s a negligible use of energy compared to every other industry.”

— Michael Saylor.

It’s funny to see all the backlash Bitcoin receives because of its energy consumption when you stop and see the many different sectors that are significantly more energy-intensive than Bitcoin’s network.

The legacy financial system, for example, consumes 29 times more energy than Bitcoin, and it isn’t nearly as effective and efficient.

Source: Bitcoin Mining Council.

“Every one of these major industries is a bigger user of energy. They’re using less sustainable energy and, for the most part, they’re 20th-century industries that have moved down the technology learning curve.Their energy efficiency is improving only very slowly and gradually.”

— Michael Saylor.

Quarterly evolution: What changed from July to October?

It is well known that the mining landscape went through some turbulent waters these last months. After the migration of more than half the total miners, we’ve seen hashrate progressively increasing week after week.

According to Saylor, the hashrate from the last BMC’s quarterly report to this one jumped by 48%. But that’s not the only good news. MicroStrategy’s CEO emphasized the difference between the growth in hashrate and electricity consumption.

Indeed, while hashrate grew 48%, the energy used in producing that hashrate only did so by 21%. The proportion of both metrics implies a 23% rise in Bitcoin mining energy efficiency measured in PHs generated per MW.

Source: Bitcoin Mining Council.

A possible explanation for this leap of efficiency is that most of the hashrate that went offline during the migration was mainly produced by obsolete, inefficient mining hardware. While on the other hand, the new miners joining the network after that are doing so with newer, more modern machines that produce more hashrate using less energy.

This reasoning is better illustrated in the picture below.

Source: Bitcoin Mining Council.

As you can see, the technological improvement of Bitcoin mining equipment has dramatically reduced the amount of energy needed to produce a TH. As we keep moving towards these more efficient machines, the energy consumption will decrease inversely proportional to the growth of hashrate output.

Conclusion: What’s in store for Bitcoin mining?

The BMC’s findings offer more than enough reasons to be optimistic about Bitcoin’s energy consumption, environmental impact — or rather its decrease — , and overall efficiency.

Photo by Dmitry Demidko on Unsplash

Additionally, hardware manufacturers will likely keep looking into technological advancements to develop even more efficient miners. So it’s logical to assume that these numbers will further improve in the long term.

Saylor also argued that halvings would incentivize miners to cut their power consumption every new epoch. Since rewards are primarily composed of block subsidies, halvings would cut profitability by nearly ~50%.

In that scenario, miners would have to reduce costs to stay profitable, thus needing cheaper energy sources, which are often renewables.

If you want to learn more about how mining rewards work, consider reading the article below.

What about you? Do you think Bitcoin mining will keep becoming more environmentally friendly and efficient with the passing years? Or do you think we’ll eventually reach stagnancy?

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