Bitcoin May Be Hitting Record Energy Consumption LevelsBy Charlie Custer
Bitcoin’s Proof of Work consensus system is a big part of what has made the cryptocurrency — and all the subsequent currencies based on it — popular. But it has also been the source of environmental controversy, since running the calculations required to create blocks and maintain the network requires quite a lot of hardware and electricity.
It’s difficult to say precisely how much energy Bitcoin consumes, but two separate metrics — Digiconomist’s Bitcoin Energy Consumption Index and the University of Cambridge’s Centre for Alternative Finance — both estimate that this summer, Bitcoin has either equalled or surpassed its highest-ever levels of energy consumption. And although there are differences in their estimates (Digiconomist’s is slightly higher), both agree that this year’s energy usage peaked in early or mid-July, and is remaining near all-time highs somewhere in the 60-75 TWh per year range.
According to Cambridge, this means that Bitcoin accounts for about a quarter of a percent of the world’s energy total energy consumption. To put that into perspective, if these estimates are accurate, Bitcoin’s network may be using approximately as much power as Colombia, a nation with a population of roughly 50 million people.
The news comes at a somewhat awkward time for Bitcoin, since its all-time high energy consumption is coinciding with all-time highs in temperature linked to climate change.
However, the Bitcoin network’s energy consumption isn’t necessarily a complete indicator of its climate impact.
On the one hand, many Bitcoin miners are served by renewable energy power plants. According to Cambridge, renewable energy probably accounts for somewhere between 20% to 70% of the Bitcoin network’s total energy consumption. Even in a worst-case, powered-only-by-coal scenario, Bitcoin would still account for well under 1% of the world’s CO2 emissions.
On the other hand, metrics such as these track only the energy consumption associated with mining itself, and thus don’t account for other potential environmental effects. Producing and shipping mining hardware consumes energy and generates emissions. So does cooling the mining facilities — particularly during this hotter-than-ever summer.
With the global community already struggling to reduce energy consumption, seeing Bitcoin’s consumption soar to new highs certainly isn’t great PR for the cryptocurrency. Bitcoin’s emissions are minimal compared to other sources, it begs the question of why this consumption is necessary when other blockchains have been able to achieve secure consensus through Proof of Stake without the need for pricey, energy-hungry mining hardware.