Bitcoin energy consumption index

Bitcoin’s energy consumption ‘equals that of Switzerland’

By Chris Baraniuk
Technology reporter

Bitcoin uses as much energy as the whole of Switzerland, a new online tool from the University of Cambridge shows.

The tool makes it easier to see how the crypto-currency network’s energy usage compares with other entities.

However, one expert argued that it was the crypto-currency’s carbon footprint that really mattered.

Currently, the tool estimates that Bitcoin is using around seven gigawatts of electricity, equal to 0.21% of the world’s supply.

That is as much power as would be generated by seven Dungeness nuclear power plants at once.

Over the course of a year, this equates to roughly the same power consumption as Switzerland.

«We want to use comparisons that set the narrative,» said the tool’s co-creator Michel Rauchs, from the university.

«Visitors to the website can make up their own mind as to whether it seems large or small.»

How does it work?

In order to «mine» Bitcoin, computers known as mining machines are connected to the crypto-currency network.

They are tasked with verifying transactions made by people who send or receive Bitcoin. This process involves solving puzzles.

The puzzles aren’t integral to verifying movements of Bitcoin, they simply provide a hurdle to ensure no-one fraudulently edits the global record of all transactions. As a reward for pitching in to this system, miners occasionally receive small amounts of Bitcoin.

To make as much money from this process as possible, people often connect large numbers of miners to the network — even entire warehouses full of them.

That uses lots of electricity because the miners are more or less constantly working.

The University of Cambridge tool models the economic lifetime of the world’s Bitcoin miners. It uses an average electricity price per kilowatt hour ($0.05, ВЈ0.04) and the energy demands of the Bitcoin network. Finally, the model assumes that all the Bitcoin mining machines worldwide are working with various efficiencies.

It is then possible to estimate how much electricity is being consumed at any one time.

Bitcoin energy expert Alex de Vries, from accountants PwC, built a similar tool to estimate Bitcoin’s energy use last year.

He told BBC News that the most important thing was the carbon footprint of Bitcoin’s energy consumption.

That is, the emissions associated with the electricity resources used to power the crypto-currency. This varies from place to place, depending on energy supplies.

Mr de Vries said that, despite its many proponents, the Bitcoin network has an energy consumption problem. It uses lots of energy despite processing fewer than 100 million financial transactions per year.

He added that the number was «completely insignificant» in global terms. The traditional financial industry processes 500 billion transactions per year, he added.

Mr de Vries said that Bitcoin still appears to use far more energy per transaction than all the world’s banks put together, when considering the amount of energy used by data centres.

The electricity used for Bitcoin produces about 22 megatons of CO2 annually, a study in the scientific journal Joule estimated. That is as much as Kansas City in the US.

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Bitcoin Energy Consumption Index

The Bitcoin Energy Consumption Index provides the latest estimate of the total energy consumption of the Bitcoin network.

NEW STUDY: Bitcoin Boom: What Rising Prices Mean for the Network’s Energy Consumption, concluding the Bitcoin network could consume as much energy as all data centers globally, with an associated carbon footprint matching London’s footprint size. (March 2021).

Annualized Total Bitcoin Footprints

Comparable to the carbon footprint of Morocco.

Comparable to the power consumption of United Arab Emirates.

Comparable to the e-waste generation of Luxembourg.

Single Bitcoin Transaction Footprints

Equivalent to the carbon footprint of 1,659,173 VISA transactions or 124,768 hours of watching Youtube.

Equivalent to the power consumption of an average U.S. household over 54.02 days.

Equivalent to the weight of 1.84 ‘C’-size batteries or 2.60 golf balls. (Find more info on e-waste here.)

*The assumptions underlying this energy consumption estimate can be found here. Criticism and potential validation of the estimate is discussed here.
**The minimum is calculated from the total network hashrate, assuming the only machine used in the network is Bitmain’s Antminer S9 (drawing 1,500 watts each). On February 13, 2019, the minimum benchmark was changed to Bitmain’s Antminer S15 (with a rolling average of 180 days), followed by Bitmain’s Antminer S17e per November 7, 2019 and Bitmain’s Antminer S19 Pro per October 31, 2020.
***Note that the Index contained the aggregate of Bitcoin and Bitcoin Cash (other forks of the Bitcoin network have not been included). The latter has been removed per October 1, 2019.

Did you know Bitcoin runs on an energy-intensive network?

Ever since its inception Bitcoin’s trust-minimizing consensus has been enabled by its proof-of-work algorithm. The machines performing the “work” are consuming huge amounts of energy while doing so. Moreover, the energy used is primarily sourced from fossil fuels. The Bitcoin Energy Consumption Index was created to provide insight into these amounts, and raise awareness on the unsustainability of the proof-of-work algorithm.

A separate index was created for Ethereum, which can be found here.

What kind of work are miners performing?

New sets of transactions (blocks) are added to Bitcoin’s blockchain roughly every 10 minutes by so-called miners. While working on the blockchain these miners aren’t required to trust each other. The only thing miners have to trust is the code that runs Bitcoin. The code includes several rules to validate new transactions. For example, a transaction can only be valid if the sender actually owns the sent amount. Every miner individually confirms whether transactions adhere to these rules, eliminating the need to trust other miners.

The trick is to get all miners to agree on the same history of transactions. Every miner in the network is constantly tasked with preparing the next batch of transactions for the blockchain. Only one of these blocks will be randomly selected to become the latest block on the chain. Random selection in a distributed network isn’t easy, so this is where proof-of-work comes in. In proof-of-work, the next block comes from the first miner that produces a valid one. This is easier said than done, as the Bitcoin protocol makes it very difficult for miners to do so. In fact, the difficulty is regularly adjusted by the protocol to ensure that all miners in the network will only produce one valid block every 10 minutes on average. Once one of the miners finally manages to produce a valid block, it will inform the rest of the network. Other miners will accept this block once they confirm it adheres to all rules, and then discard whatever block they had been working on themselves. The lucky miner gets rewarded with a fixed amount of coins, along with the transaction fees belonging to the processed transactions in the new block. The cycle then starts again.

The process of producing a valid block is largely based on trial and error, where miners are making numerous attempts every second trying to find the right value for a block component called the “nonce“, and hoping the resulting completed block will match the requirements (as there is no way to predict the outcome). For this reason, mining is sometimes compared to a lottery where you can pick your own numbers. The number of attempts (hashes) per second is given by your mining equipment’s hashrate. This will typically be expressed in Gigahash per second (1 billion hashes per second).

Sustainability

The continuous block mining cycle incentivizes people all over the world to mine Bitcoin. As mining can provide a solid stream of revenue, people are very willing to run power-hungry machines to get a piece of it. Over the years this has caused the total energy consumption of the Bitcoin network to grow to epic proportions, as the price of the currency reached new highs. The entire Bitcoin network now consumes more energy than a number of countries. If Bitcoin was a country, it would rank as shown below.

Apart from the previous comparison, it also possible to compare Bitcoin’s energy consumption to some of the world’s biggest energy consuming nations. The result is shown hereafter.

Carbon footprint

Bitcoin’s biggest problem is perhaps not even its massive energy consumption, but the fact most mining facilties in Bitcoin’s network are located in regions (primarily in China) that rely heavily on coal-based power (either directly or for the purpose of load balancing). To put it simply: “coal is fueling Bitcoin” (Stoll, 2019).

Thinking about how to reduce CO2 emissions from a widespread Bitcoin implementation

Locating miners

Determining the exact carbon impact of the Bitcoin network has been a challenge for years. Not only does one need to know the power requirement of the Bitcoin network, but one also need to know where this power is coming from. The location of miners is a key ingredient to know how dirty or how clean the power is that they are using.

Just like it’s not easy to find out what machines are active in the Bitcoin network, determining location isn’t an easy feat either. Initially the only information available to this end was the common belief that the majority of miners were located in China. Since we know the average emission factor of the Chinese grid (around 700 grams of carbon dioxide equivalent per kilowatt-hour), this can be used for a very rough approximation of the carbon intensity of the power used for Bitcoin mining. Assuming that 70% of Bitcoin mining is taking place in China, and that 30% of mining is completely clean, this yields a weighted average carbon intensity of 490 gCO2eq/kWh. This number can subsequently be applied to a power consumption estimate of the Bitcoin network to determine its carbon footprint.

A more detailed estimate

Later on, more granular information became available in the Global Cryptocurrency Benchmarking Study by Garrick Hileman and Michel Rauchs from 2017. In this study, they identified facilities representing roughly half of the entire Bitcoin hash rate, with a total (lower bound) consumption of 232 megawatts. Chinese mining facilities were responsible for about half of this, with a lower bound consumption of 111 megawatts. This information can be used to get a more accurate idea of the carbon emission factor in grams of carbon dioxide equivalent per kilowatt-hour (gCO2eq/kWh) that applies to the electricity used for mining.

The table below features a breakdown of the energy consumption of the mining facilities surveyed by Hileman and Rauchs. By applying the emission factors of the respective country’s grid, we find that the Bitcoin network had a weighted average carbon intensity of 475 gCO2eq per kWh consumed. (This number is currently applied to determine the carbon footprint of the Bitcoin network based on the Bitcoin Energy Consumption Index.)

Location	Power consumption (megawatts)	% of surveyed facilities	Carbon intensity (gCO2eq/kWh)
China	111	47.60	711
Georgia	60	25.80	231
United States	27	11.60	489
Canada	18	7.70	158
Sweden	10	4.3	13
Iceland	5	2.1	0
Estonia	2	0.90	793
Total / Weighed Average	233	100.00	475

Breakdown of regional carbon intensity

One can argue that specific locations in the listed countries may offer less carbon intense power. In 2018 Bitcoin company Coinshares suggested that the majority of Chinese mining facilities were located in Sichuan province, using cheap hydropower for mining Bitcoin. Subsequent studies have, however, never been able to support this claim and/or found the opposite. Confronted with this evidence, the lead author of the Coinshares paper had to admit “mistakes” were made.

The main challenge here is that the production of hydropower (or renewable energy in general) is far from constant. In Sichuan specifically the average power generation capacity during the wet season is three times that of the dry season. Because of these fluctuations in hydroelectricity generation, Bitcoin miners can only make use of cheap hydropower for a limited amount of time.

In a study titled “The Carbon Footprint of Bitcoin” (Stoll et al. 2019) properly account for these regional differences (while also introducing a new method to localize miners based on IP-addresses), but still find a weighted average carbon intensity of 480-500 gCO2eq per kWh for the entire Bitcoin network (in line with previous and more rough estimations).

Using a similar approach, Cambridge in 2020 provided a more detailed insight into the localization of Bitcoin miners over time. Charting this data, and adding colors based on the carbon intensity of the respective power grids, we can reveal significant mining activity in highly polluting regions of the world during the Chinese dry season (as shown below). On an annual basis, the average contribution of renewable energy sources therefore remains low. When Cambridge subsequently surveyed miners (also in 2020), respondents indicated only 39% of their total energy consumption actually came from renewables.

Key challenges for using renewables

It is important to realize that, while renewables are an intermittent source of energy, Bitcoin miners have a constant energy requirement. A Bitcoin ASIC miner will, once turned on, not be switched off until it either breaks down or becomes unable to mine Bitcoin at a profit. Because of this, Bitcoin miners increase the baseload demand on a grid. They don’t just consume energy when there is an excess of renewables, but still require power during production shortages. In the latter case Bitcoin miners have historically ended up using fossil fuel based power (which is generally a more steady source of energy).

Further substantiation on why Bitcoin and renewable energy make for the worst match can be found in the peer-reviewed academic article “Renewable Energy Will Not Solve Bitcoin’s Sustainability Problem” featured on Joule. With climate change pushing the volatility of hydropower production in places like Sichuan, this is unlikely to get any better in the future.

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