{"id":965,"date":"2020-07-30T00:01:40","date_gmt":"2020-07-29T16:01:40","guid":{"rendered":"https:\/\/www.btse.com\/blog\/?p=965"},"modified":"2023-03-08T08:53:13","modified_gmt":"2023-03-08T08:53:13","slug":"bitcoin-energy-consumption","status":"publish","type":"post","link":"https:\/\/www.btse.com\/blog\/bitcoin-energy-consumption\/","title":{"rendered":"Exploring Bitcoin Energy Consumption"},"content":{"rendered":"

written by @emylacapra<\/a><\/span><\/p>\n

The most vocal opponents of Bitcoin regularly tout energy consumption and CO2 emissions as a top argument. While making the headlines of financial and economic newspapers, this spread of “alarming” data commonly lacks one important facet of the story: the origin of Bitcoin energy sources.<\/strong><\/p>\n

“Bitcoin\u2019s contribution to CO2<\/span> emissions is too high, it devours more electricity than Switzerland<\/a>,<\/span> and it\u2019s disastrous for the climate!!!” Sound familiar?<\/p>\n

In exploring this topic, we’ll try to bring clarity to one of Bitcoin\u2019s most fascinating and controversial qualities by investigating the at times contradictory reported data as well as developments that may impact Bitcoin energy consumption in the future.<\/p>\n

Reporting on Bitcoin energy consumption is no easy task due to the different methodologies adopted by analysts, the limited data availability, and to the highly variable conditions across the industry (for example which mining hardware is used; electricity costs; cooling needs).<\/p>\n

One aspect to keep in mind at all times is the mining consumption <\/strong>vs the mining generation o<\/strong>f Bitcoin energy. The reports that produce an unfavorable picture for Bitcoin indicate approximate energy consumption levels but disregard the source and the locations where the power is generated; the others refute such considerations because they\u2019re half-truths with one side of the story is totally neglected.<\/p>\n

Four reports have established the pillars of research into Bitcoin energy consumption, the Cambridge<\/a><\/span> Bitcoin Electricity Consumption report, the Joules<\/a><\/span> Carbon Footprint report, the Coinshares<\/a><\/span> Bitcoin Mining report, and the IEA<\/a><\/span> (the US Information Energy Agency) Bitcoin Energy Use report.<\/p>\n

The first two are supported by the Bitcoin Energy Consumption Index <\/a><\/span><\/em>(BECI), which contrary to the reports admits that \u201cIn the long run, we can envision Bitcoin miners to increasingly establish their operations near large sources of renewable energy, which also triggers further development of renewable generation resources at the respective sites\u201d. Still, they compare Bitcoin\u2019s emissions to those of a country like Jordan or Sri Lanka. They call for legislators to crack down on Bitcoin because it is polluting the world.<\/p>\n

Coinshares and IEA have a milder approach. While confirming the high consumption of Bitcoin energy, they also mitigate the issue by reporting massive usage of renewables whose impact on CO2<\/span> emissions is little or none compared to fossil fuels. Moreover, such resources would get wasted if they were not used in mining.<\/p>\n

 <\/p>\n

Bitcoin Impact on CO2<\/span> Emissions<\/strong><\/h2>\n

At the end of 2018, the revelation<\/a><\/span> by Nature that Bitcoin emissions alone could push global warming above 2\u00b0C caused turmoil among the community and across environmental agencies who suddenly saw Bitcoin as one of the biggest threats to climate health.<\/span><\/p>\n

That report, though, just like the Cambridge and the Joules reports, does not take into account that 74% of Bitcoin energy comes from renewables.<\/strong> What matters is not so much the amount of energy but rather the type <\/em>of energy source being used to generate electricity, as renewables and fossil fuels are not equivalent from a carbon footprint perspective.<\/span><\/p>\n

 <\/p>\n

Why Bitcoin Requires So Much Energy<\/strong><\/h2>\n

Energy consumption in Bitcoin is an inevitable factor because any non-reversible computation must consume a minimum amount of energy (Landaurer\u2019s principle<\/a><\/span>)<\/p>\n

The first miner to solve a block of transactions is rewarded with newly minted bitcoins and network transaction fees. Mining consumes an enormous amount of energy through proof of work<\/a><\/span>. The energy use of the Bitcoin network is an absolute necessity to ensure security.<\/p>\n

The energy consumption of the Bitcoin network depends on a few inter-related factors, some of which respond to the changing price of bitcoin:<\/p>\n