These transactions are verified by solving complex cryptographic and mathematical problems for which bitcoin miners use a lot of power. Together, they use more electricity than many countries. Here’s a look at how much power it takes to create new bitcoins and how much power the bitcoin network uses every day.
Why Do Bitcoin Transactions Require Energy?
Solving complex problems requires a fair amount of computational power and, in theory, nearly any computer can be used to mine bitcoin. In reality, however, high competition makes it hard to earn a profit unless you have a purpose-built bitcoin mining setup and relatively cheap electricity. The more computing power you have, the more likely you are to solve the calculations and earn the bitcoin mining reward. This incentivizes Bitcoin miners to buy more powerful computers to achieve a higher hash rate. But more powerful computers may also require more power off the electricity grid, making the total mining network a huge energy hog. The four main factors in how much electricity a Bitcoin miner uses are: If you’re mining yourself, you can lower your energy use with a more efficient miner or choose a less competitive currency to mine.
How Much Energy Does the Bitcoin Network Consume?
Exactly how much power does it take to create a bitcoin? According to Digiconomist, as of Sept. 15, 2022, a single bitcoin transaction required 1,390.49 kWh, the equivalent of power consumption of an average U.S. household over nearly 48 days. Annual energy consumption of bitcoin is projected to be 129.47 TWh in the year, or about as much power as is used annually in Sweden. Here’s a look at bitcoin’s energy consumption (even at the lower end of 94.82 TWh) compared to the 2019 electricity consumption of some countries based on data from the U.S. Energy Information Administration (U.S. EIA): Energy used by the network may ebb and flow based on the number of connected miners, transaction volume, and what kinds of computers are doing the mining. For example, as reported by the South China Morning Post, government action in China in 2021 led many of the world’s biggest Bitcoin mining operations to shut down. That is likely to shift Bitcoin mining and electricity consumption to computers outside of China that may require different amounts of energy and rely on different sources for that energy. If you’re a big cryptocurrency enthusiast, you may find this energy use to be worthwhile. However, the environmental impact is an important consideration when deciding whether or not to participate in the bitcoin network or a more energy-efficient alternative.
Environmental Impact of Bitcoin Energy Consumption
Bitcoin’s energy consumption has far-reaching environmental consequences. It’s not just the amount of energy that’s required to power its network but also what kind of energy and electronic waste that’s generated in the process.
Carbon Footprint
According to Digiconomist, the carbon footprint of a single bitcoin transaction in 2022 is roughly 775.56 kilograms of carbon dioxide equivalent (CO2), or roughly equal to the carbon footprint generated by 1,718,906 Visa transactions or watching 129,260 hours of YouTube videos. bitcoin network’s annual carbon footprint is 72.21 metric tons of CO2. In China, most electricity comes from coal-burning power plants, which has a huge environmental impact. So when most bitcoin mining mainly took place in China, it relied on a grid that was primarily powered by dirty, coal-burning power plants.
Electronic Waste
Specialized equipment required for bitcoin mining, unlike requirements for some other cryptocurrencies, cannot be repurposed for other tasks. This generates massive amounts of electronic waste in the form of computer hardware. According to Digiconomist, in 2022 a single bitcoin transaction yields 410.20 grams of electronic waste or the equivalent weight of 2.50 iPhones 12 or 0.84 iPads.
Greener Alternatives?
The energy-intensive method behind bitcoin is known as “proof of work" (PoW). There are other consensus mechanisms such as “proof of stake” (PoS) followed by cardano or the Stellar Consensus Protocol (SCP) used by stellar, that are designed for faster transactions and lower electricity usage. For those who that stick with bitcoin mining, the best ways to cut energy use include shifting to renewable energy, like solar or wind power, or buying the most efficient mining hardware. Miners using application-specific integrated circuits or ASIC graphics cards may use less power per Bitcoin than less efficient alternatives. The Bitmain Antminer is an example of a popular cryptocurrency-specific mining computer. Some miners also rely on combining forces with others through “mining pools” to distribute energy and other costs associated with mining.
Is Bitcoin Worth the Environmental Cost?
Elon Musk isn’t the only critic of bitcoin’s power use. Many, including those who otherwise like cryptocurrency, may find the environmental cost of bitcoin to be far too large, particularly in an age where people struggle with the real-life results of climate change. But proponents argue that bitcoin and cryptocurrencies are well worth it, as they could usher in a new age of energy use patterns. With upgrades to the cryptocurrency landscape, such as those execute by ethereum, it may be possible to find the best of both worlds at some point in the future, with energy-efficient cryptocurrencies powered by renewable electricity. For today, however, mining bitcoin has a high environmental cost. If you think that electricity usage is too much, you can factor that into your cryptocurrency investing decisions, much like Elon Musk.
