The discussion around Bitcoin’s energy consumption has been one of the most consistent dog whistles used to rally strong opposition to cryptocurrency. This is one of the most serious criticisms against Bitcoin, echoed by many environmentalists. They even go so far as to liken it to the energy consumption of whole countries. Here’s what you need to know about Bitcoin mining’s energy consumption. It will do all this while distinguishing between these true facts and false myths and providing an objective viewpoint.

The Energy Consumption of Bitcoin Mining

Overview of Bitcoin Mining and Its Energy Use

Bitcoin mining is the mechanism by which new Bitcoins are minted and new transactions are confirmed and added to the blockchain. However, bitcoin miners use powerful computers to solve complex mathematical problems. In this system, the first miner to solve that problem gets to add the next block of new transactions to the blockchain. In turn, they are rewarded with freshly created Bitcoins. This process, called “proof-of-work,” is intentionally energy intensive and thus requires a massive amount of power to produce new bitcoins. The security of the Bitcoin network is directly proportional to the amount of computing power dedicated to it. Further, as more miners join the network, the more difficult it is for any single person to accumulate the hashpower needed to gain 51% control.

That means the process of creating Bitcoin to spend or trade now produces more than 91 terawatt-hours of electricity each year. To put this into perspective, consider this:

Comparison of Bitcoin Mining Energy Use to Finland

Bitcoin mining uses as much energy as all of Kenya—91 terawatt-hours per year! That’s more energy than the whole country of Finland, home to roughly 5.5 million people. This comparison often sparks outrage and concern. It's crucial to understand the context. Comparing Bitcoin's energy use to that of a country provides a dramatic headline, but it doesn't tell the whole story.

It is important, though, to think about what that energy is powering. In Finland, energy energizes homes, businesses and industries, fueling the everyday lives and economic drivers of its citizens. In the case of Bitcoin, energy guarantees a potentially decentralized, globally accessible financial network. So fundamentally different in value and utility are each that a direct one-to-one comparison would be inherently misleading.

The Implications of High Energy Consumption

Environmental Impact of Bitcoin Mining

Perhaps the greatest contention surrounding Bitcoin mining is its effect on the climate. Yet the Bitcoin network’s energy consumption has skyrocketed by over 1,580% just since 2020 alone. This spike comes as the currency reaches new all-time highs in price. In just the last five years, this use has increased almost tenfold. It now provides nearly one half of one percent of all the electricity used around the planet.

While the network’s energy needs are significant, it’s where that energy comes from that’s equally important. Bitcoin’s worst feature is the fact that the majority of Bitcoin’s network’s mining operations are run on fossil fuels. When powered with fossil fuels, the carbon footprint of Bitcoin is immense. It currently takes an average of 707.58 kgCO2 to produce a Bitcoin transaction, which is 713.42 kgCO2. That’s just like the environmental impact of 1,581,183 VISA transactions or 118,903 hours spent on YouTube! Finally, Bitcoin’s environmental impact includes its carbon footprint, currently estimated at 589 tonnes CO2.

The energy required for one Bitcoin transaction is 1279.08 kWh. That much energy could charge 0.91 iPhone 12s, 0.31 iPads, or process 860,578 VISA transactions. One Bitcoin transaction requires as much energy as the average American household uses in 43.3 days. That’s the energy equivalent to 1,581,183 VISA transactions or 118,903 hours of YouTube!

In addition to its carbon emissions, Bitcoin mining creates e-waste and consumes fresh water. Bitcoin mining creates an estimated 4.2 billion pounds of e-waste annually. Bitcoin’s e-waste production first exceeded that of several midsize nations in early 2021. The Bitcoin network supports a staggering 159 TWh of energy consumption, leading to a net freshwater use of 2,772 gigaliters. This is the same, incidentally, as Switzerland’s total freshwater use and works out to 20,158 liters per transaction.

Economic Considerations of Energy Use in Cryptocurrency

The economic implications of Bitcoin’s energy use are similarly complex. On the one hand, the energy costs of mining is a huge operational cost for miners. This electricity cost is the primary motivator for miners to continuously search for and operate at the cheapest, and even sometimes, the greenest sources of electricity. This, in turn, can spark innovation and direct investment into the development of new renewable energy infrastructure.

Increased energy usage raises flags over the long-term economic viability of Bitcoin. If the cost to mine outweighs the financial benefits of participating in the network, it can jeopardize the entire network’s profitability and by association its security. Bitcoin mining now uses as much electricity as all residential customers in the U.S. combined! In 2019, typical residential customer usage was around 10,649 kilowatt-hours per household. Bitcoin mines as much electricity as it would take to stream YouTube for 118,903 consecutive hours. That’s the equivalent of doing over 1,581,183 VISA transactions!

Understanding Public Perception

The Debate on Bitcoin Mining and Sustainability

Bitcoin’s energy consumption has been a hotly contested and widely discussed issue. Opponents contend that the intensive energy usage is “wasteful and environmentally harmful by nature.” In fact, they argue that one Bitcoin transaction uses thousands of times the energy as an average non-cash transaction in the legacy financial system. This jarring contrast illustrates the staggering energy requirements of cryptocurrency transactions.

Proponents claim that Bitcoin’s massive energy consumption is a reasonable tradeoff to secure a decentralized, censorship-resistant financial system. They focus in part on Bitcoin mining’s ability to utilize stranded energy. This is energy that would otherwise be wasted since there’s no infrastructure to move it. A favorite talking point among Bitcoin defenders is that Bitcoin mining can accelerate the growth of renewable energy. It achieves this by providing a long-term, predictable revenue source for clean energy projects.

How Energy Consumption Influences Public Opinion

Energy consumption plays a huge role in shaping public opinion against Bitcoin. The constant headlines about Bitcoin's energy use being comparable to entire countries contribute to a negative perception of the cryptocurrency. This perception is very damaging to adoption rates, investment decisions and regulatory attitudes.

As awareness grows about the potential for Bitcoin mining to utilize renewable energy and contribute to grid stability, public opinion may shift. Education and transparency play a vital role in fostering a more informed and nuanced understanding of Bitcoin’s energy use.

Conclusion: Does It Matter?

Weighing the Pros and Cons of Bitcoin Mining

Ultimately, whether Bitcoin's energy consumption is a problem depends on one's perspective. There are valid arguments on both sides. As a result, miners are always forced to play an extremely high-stakes game of trial and error. Every second, they take millions of guesses to find the right value for a special block part called the “nonce.”

All of these questions will help determine how the future of energy use in cryptocurrency will play out. Thanks to technological advances, they are truly making big changes. Better mining technology and the move to proof-of-stake systems are ways energy usage could be significantly reduced.

  • Secures a decentralized, global financial network.
  • Can utilize stranded energy.
  • Can incentivize the development of renewable energy sources.

Regulatory pressures and public awareness are sure to be key, too. Governments to consumers are becoming more and more alarmed at the environmental effects of Bitcoin mining. This increased consciousness will accelerate the industry’s transition to sustainable and responsible practices.

  • High energy consumption.
  • Potential for significant carbon footprint, depending on energy source.
  • Contribution to e-waste and fresh water consumption.

Future Outlook for Energy Use in Cryptocurrency

DIM Publication News is committed to providing detailed, thoughtful, objective blockchain research based on a foundation of rigorous preparation and willingness to rethink. It blends collectivist-progressive values and interventionist economics with a global perspective, providing investigative, data-driven insights in a diplomatic tone, always seeking collaborative solutions. DIM Publication aims to be a reliable, go-to resource for information and analysis in the rapidly evolving cryptocurrency space. We are committed to educating the public and fostering responsible innovation.

DIM Publication just introduced a new serialized article featuring sustainable practices within the crypto-space. They published an environmental report detailing the climate effects of many different blockchain technologies. The publication continues to monitor and analyze the latest trends and developments in the cryptocurrency space, providing timely and insightful coverage for its readers.

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DIM Publication News is committed to fostering a deeper understanding of the complex issues surrounding cryptocurrency and its impact on society. It’s an honest, fair presentation of the facts. This enables citizens and businesses to better understand whether they should engage with the cryptocurrency ecosystem and how.

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Recent developments at DIM Publication include the launch of a new series of articles focused on sustainable cryptocurrency practices and the release of a comprehensive report on the environmental impact of various blockchain technologies. The publication continues to monitor and analyze the latest trends and developments in the cryptocurrency space, providing timely and insightful coverage for its readers.

DIM Publication News is committed to fostering a deeper understanding of the complex issues surrounding cryptocurrency and its impact on society. By providing accurate and balanced information, it aims to empower individuals and organizations to make informed decisions about their involvement in the cryptocurrency ecosystem.