For a long time, debates about the "waste" of energy in cryptocurrency mining have never stopped. Against the backdrop of a bull market, the increasing popularity of cryptocurrencies has intensified these discussions. But how much electricity does Bitcoin mining actually use? How does Bitcoin's electricity consumption compare to that of internet giants or even the total electricity usage of some countries and regions? The Cambridge Bitcoin Electricity Consumption Index provides an answer to this question.
As of March 18, 2021, over the previous year, the total electricity consumption of Bitcoin mining was approximately 129 terawatt-hours (TWh). Note: 1 TWh equals 1 billion kilowatt-hours (kWh), which is what we commonly refer to as 1 billion units of electricity.
For comparison, during the same statistical period, the total electricity consumption of the entire country of China was about 6,543 TWh, and that of the entire United States was approximately 3,989 TWh. If we compare Bitcoin mining's electricity consumption horizontally among the world's major countries, it would rank 29th out of 196 countries, slightly higher than Norway's total consumption of 124 TWh in the same year. Meanwhile, Bangladesh, with a population of 165 million, had a total electricity consumption of only 70 TWh during the same period.
The total electricity consumption of all data centers worldwide was 205 TWh. Google's total electricity consumption was 12 TWh, and Facebook's was 5 TWh. This means that over the past year, Bitcoin mining consumed almost 11 times more electricity than Google and nearly 26 times more than Facebook.
An earlier report released by the University of Cambridge showed that although 76% of cryptocurrency miners use or partially use renewable energy for mining, renewable energy currently accounts for only 39% of the total energy used in cryptocurrency mining. Hydropower is the most popular energy source among cryptocurrency miners, with its usage share exceeding 60% in several major regions globally. In contrast, clean energy sources such as solar, wind, and geothermal energy currently account for a relatively small proportion of the energy used in cryptocurrency mining.
Global Energy Comparisons
Bitcoin mining’s energy usage is substantial when compared to both nations and corporations. It highlights the scale of the computational work required to secure the network and process transactions. This energy expenditure is a fundamental aspect of proof-of-work blockchains, designed to ensure decentralization and security.
The geographical distribution of miners plays a key role in the energy mix. Regions with abundant renewable resources, like parts of Scandinavia and Southwest China, have historically been attractive for miners seeking lower-cost power. This has influenced the overall percentage of renewables used in the industry.
The Renewable Energy Debate
The discussion around Bitcoin's energy consumption often centers on its source. While the share of renewables is significant, the majority still comes from non-renewable sources. This has led to criticisms about its environmental impact, especially concerning carbon emissions.
However, the industry is increasingly exploring ways to improve its sustainability. Some mining operations are being set up near renewable energy sources or are using excess energy that would otherwise be wasted, such as flared natural gas. This trend could potentially increase the renewable energy share in the future. For those interested in the broader context of digital assets and energy markets, explore more strategies for insights.
The Economic Perspective
Proponents of Bitcoin argue that the energy consumed is justified by the value the network provides. As a decentralized financial system and store of value, Bitcoin offers services that traditional systems cannot, and its energy usage is the direct cost of its security and reliability.
The cost of electricity is a primary factor for miners. Their profitability depends on it, which naturally drives them towards the cheapest sources of power, which are often renewable. This economic incentive is a powerful force for aligning mining with sustainable energy over the long term.
Frequently Asked Questions
How much electricity does one Bitcoin transaction use?
It's challenging to pinpoint an exact per-transaction value because energy is spent on securing the entire network, not just processing individual transactions. Estimates vary widely, but it is significantly higher than traditional electronic payment systems.
Is Bitcoin mining energy consumption increasing?
Yes, historically, as the price of Bitcoin increases and more miners join the network, the total energy consumption has tended to rise. However, improvements in hardware efficiency and the shift towards renewable sources can moderate this growth.
Can Bitcoin mining be sustainable?
Many industry participants believe so. The push towards using stranded or wasted energy sources, like flared gas, and the integration with renewable grids are key strategies being developed to reduce the environmental footprint.
How does Bitcoin's energy use compare to the traditional banking system?
Comparisons are complex. The traditional banking system includes a vast infrastructure of physical branches, data centers, and ATMs. Some reports suggest its total energy consumption is far greater than Bitcoin's, though direct comparisons are difficult due to different system functions and scales.
What is being done to reduce Bitcoin's energy consumption?
Beyond seeking renewable sources, there is ongoing innovation in more energy-efficient mining hardware. Furthermore, some blockchain projects are exploring alternative consensus mechanisms, like proof-of-stake, which consume drastically less energy.
Where can I find reliable data on Bitcoin's energy use?
The Cambridge Centre for Alternative Finance and the Digiconomist website are two widely cited sources that provide indexes and data tracking the estimated energy consumption of the Bitcoin network. For a deeper dive into on-chain metrics and network data, view real-time tools available online.