The best estimates of energy production geolocation (from which an energy mix can be inferred) come from the CCAF, which has worked with major mining pools to put together an anonymized dataset of miner locations.īased on this data, the CCAF can guess about the energy sources miners were using by country, and in some cases, by province. Mining is an intensely competitive business, and miners tend not to be particularly forthcoming around the details of their operations. But its carbon emissions are much harder to ascertain. For example, one unit of hydro energy will have much less environmental impact than the same unit of coal-powered energy.īitcoin’s energy consumption is relatively easy to estimate: You can just look at its hashrate (i.e., the total combined computational power used to mine Bitcoin and process transactions), and then make some educated guesses as to the energy requirements of the hardware that miners are using. While determining energy consumption is relatively straightforward, you cannot extrapolate the associated carbon emissions without knowing the precise energy mix - that is, the makeup of different energy sources used by the computers mining Bitcoin. Energy Consumption Is Not Equivalent to Carbon Emissionsįirst, there’s an important distinction between how much energy a system consumes and how much carbon it emits. Specifically, there are a few key misconceptions worth addressing. Understanding Bitcoin’s energy consumption may not settle questions about its usefulness, but it can help to contextualize how much of an environmental impact Bitcoin advocates are really talking about making. If we’re going to have this debate, however, we should be clear on how Bitcoin actually consumes energy. Whether you feel Bitcoin has a valid claim on society’s resources boils down to how much value you think Bitcoin creates for society. If you are one of the tens of millions of individuals worldwide using it as a tool to escape monetary repression, inflation, or capital controls, you most likely think that the energy is extremely well spent. If you believe that Bitcoin offers no utility beyond serving as a ponzi scheme or a device for money laundering, then it would only be logical to conclude that consuming any amount of energy is wasteful. How you answer that likely depends on how you feel about Bitcoin. But how much energy should a monetary system consume? This certainly sounds like a lot of energy. According to the Cambridge Center for Alternative Finance (CCAF), Bitcoin currently consumes around 110 Terawatt Hours per year - 0.55% of global electricity production, or roughly equivalent to the annual energy draw of small countries like Malaysia or Sweden. On the face of it, the question about energy use is a fair one. As cryptocurrencies, and Bitcoin in particular, have grown in prominence, energy use has become the latest flashpoint in the larger conversation about what, and who, digital currencies are really good for. But figuring out how much consumption is too much is a complex question that’s intertwined with debates around our priorities as a society. The calculation of which goods and services are “worth” spending these resources on, after all, is really a question of values. How much energy does an industry deserve to consume? Right now, organizations around the world are facing pressure to limit the consumption of non-renewable energy sources and the emission of carbon into the atmosphere.
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