Bitcoin's Energy Consumption: A Debate That's Over?

By Michael @ CryptoEQ | CryptoEQ | 27 May 2024

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Bitcoin’s Energy Consumption

Proof of Work and Mining

Bitcoin’s energy consumption stems from the proof-of-work (PoW) consensus mechanism, which requires miners to solve complex mathematical problems. These problems can only be solved through iterative processes using hashing, ensuring no shortcuts exist. This competitive system adjusts difficulty based on the total hashing power to maintain an average of one new block every ten minutes. As Bitcoin's value surged from below a dollar to around $70,000 per BTC, the competition and infrastructure for mining have grown exponentially, leading to significant energy consumption.

Hashrate, Energy Use, and 

Bitcoin’s hashrate, a measure of the computational power used for mining, has seen substantial growth. Mining Pool Stats reports a current network hashrate of 660 EH/s, equating to 660 million trillion hashes per second. Companies like Marathon Digital Holdings (MARA), one of the largest Bitcoin mining entities, contribute 29.9 EH/s or 4.5% of the network's total, consuming 760 MW of electricity. This implies that the entire Bitcoin network consumes approximately 16.9 GW, translating to an annual consumption of around 150 TWh. This figure aligns with data from the Cambridge Electricity Consumption Index, suggesting Bitcoin's energy usage is comparable to that of 500,000 average households or slightly less than Northern Ireland's total household consumption.

Inarguably, Bitcoin mining utilizes electricity to power its PoW mechanism. Whether it is a lot or a little depends on your frame of reference. But remember, PoW is essential to a decentralized consensus, network security, and the issuance of new BTC (i.e., Bitcoin’s predictable monetary policy). Bitcoin is not Bitcoin without PoW.

Therefore, yes, Bitcoin consumes approximately the same amount of energy as a small nation-state. It also consumes similar amounts of energy as clothes dryers. Both are true. But strangely, there aren’t many (any?) campaigns targeting clothes dryers, data centers, cruise lines, video games, gold mining, etc. Why not?

Observing Bitcoin’s energy consumption to be similar to that of a small nation makes sense when one sees the utility Bitcoin offers. Bitcoin is a programmable, permissionless, sound currency, something that many nations are not able to provide to their citizens. It is a top-10 base money in the world today. In contrast, the Finnish markka is not one of the top 30, nor used by anyone outside of the 5 million people in Finland.

Despite these eye-opening statistics and comparisons, Bitcoin critics remain unconvinced because they do not see the utility of Bitcoin. However, just because one person doesn’t benefit from something, does it give that person the right to try and take it away from those who do? What if this same stance was taken with the above examples? Many people do not play video games or go on cruises. Should they, therefore, cease to exist, too? The fact that these industries exist at all proves that someone somewhere values them. So, why is Bitcoin any different?

Bitcoin mining is frequently denigrated for its "wasteful" energy use, which implies that the Bitcoin network is not useful, a claim that Bitcoin’s 100's of millions of users might refute. The energy and associated costs required to secure the network are precisely how Bitcoin generates its security. If there were no costs, then there would be no security.

The Bitcoin network’s energy efficiency and utility are not comprehensively understood by focusing entirely on the particulars of mining; broadly, it is essential to appreciate the societal merit of non-state money. The gross and systematic distortion of price signals caused by costless and arbitrary monetary inflation creates malinvestment, economic inefficiencies, and waste on a scale that would dwarf Bitcoin’s approximate 0.05% share of global energy consumption.

The  Bitcoin network provides a globally-inclusive, censorship-resistant, incorruptible, self-sovereign monetary network for the entire world. Within that context, the amount of energy used (again, 0.05% of the global energy) is absolutely worth the cost. Especially considering, 

  • nearly everyone on the globe is currently living under double-digit inflation
  • Two billion+ people live under authoritarian regimes where their rights are suppressed and are subjected to capital controls
  • 3 billion+ are underbanked or have no access to bank accounts

Bitcoin gives BILLIONS of people an alternative currency/savings technology where there otherwise are no alternatives. To claim Bitcoin has no utility or value is to deny the lived experience of millions of less fortunate individuals cut off from the Western world’s living standards and freedoms.

Note the chart below from Chainalysis, which attempts to rank crypto usage/adoption by adjusting for things like population, wallets, purchasing power, etc. for more representative comparison of actual adoption. This is a list almost entirely of emerging economies and countries in distress. While the citizens of Pakistan, Nigeria, Argentina, and others may not have billions to convert into cryptocurrencies, even their small purchasing power is being protected thanks to cryptocurrencies.


Comparative Environmental Impact

Assessing the environmental impact of Bitcoin mining, comparisons with traditional gold mining provide context. According to the Cambridge site, gold mining contributes 100.4 MtCO2e annually, whereas Bitcoin mining contributes 75.88 MtCO2e. This equates to 0.16% of global carbon emissions for Bitcoin, marginally less than gold's impact. The open-source nature of Bitcoin's code and its strong correlation between hash rate and network value highlight the importance of its energy-intensive PoW mechanism in ensuring security and scarcity.

Renewable Energy Adoption

Both Bitcoin and gold mining industries are making strides to improve their environmental impact. Notably, Bitcoin mining increasingly utilizes renewable energy and surplus energy sources, such as flared gas. Daniel Batten, co-founder of methane mitigation fund CH4 Capital, asserts that Bitcoin mining employs 54.5% renewable energy. This is feasible because Bitcoin mining operations can relocate to areas with abundant, untapped energy resources, unlike gold mining, which is location-dependent. Consequently, Bitcoin mining has the potential to leverage unused energy sources, contributing to its environmental sustainability efforts.


Bitcoin's significant energy consumption is a direct consequence of its PoW mechanism, which is essential for maintaining security and scarcity. While the environmental impact is notable, efforts to incorporate renewable energy sources and improve mining practices offer a path toward sustainability. Comparisons with gold mining highlight that both industries face similar challenges and opportunities in balancing energy consumption with their roles as alternative assets to fiat currencies.

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Michael @ CryptoEQ
Michael @ CryptoEQ

I am a Co-Founder and Lead Analyst at CryptoEQ. Gain the market insights you need to grow your cryptocurrency portfolio. Our team's supportive and interactive approach helps you refine your crypto investing and trading strategies.


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