Bitcoin Mining’s Electricity Consumption Said to Be Equivalent to that of Ireland
A recent study has concluded that the Bitcoin network consumes about 0.5% of the world’s total electricity available, which is supposedly the same amount consumed by Ireland itself.
This being said, the exact amount of electricity used by Bitcoin is difficult to assess, but crucial for understanding its impact on future policy implements and, at this point, the world. As of now, the information provided is apparently not as useful as it could be and Alex de Vries, a blockchain specialist working at PwC Netherlands also had something to share:
“We’ve seen a lot of back-of-the-envelope calculations, but we need more scientific discussion on whether this network is headed. Right now, the information provided is pretty poor quality, so I’m hoping that people will use this paper as a foundation for more research.”
While the entirety of this study is based off of estimates, Vries’ experience in economics led to concluding that the minimum current usage of the Bitcoin network is at 2.55 gigawatts. Similarly, a single transaction done on its network is said to amount to a month’s worth of electricity in Netherlands.
A possible reason for such increased uses of electricity is said to be due to Bitcoin’s use of the proof-of-work (PoW) algorithm, as well as the mining machines involved. Based on Charlie Chan and his team at Morgan Stanley, “the Bitcoin mining profitability is $8,600.”
This means that anything less than the quoted amount might lead Bitcoin miners to stop altogether or to mine other cryptos instead.
Bitcoin’s Future Electricity Expenditure
If Bitcoin’s price continues to rise, which many predict it will, Vries’ estimates that the network will use three times more electricity than it currently does. This is equivalent to the Austria’s electricity consumption. Vries’ goes on to say that 0.5% is relatively large already and that any further increase can potentially worsen the attempts in bettering climate-related goals.
Another problem that has been considered is Bitcoin’s carbon footprint because the network is said to be “fueled by coal-fired power plants in China.” While it is true that electricity is produced at relatively low rates in this respective country, the impact on the environment is believed to be far too damaging. However, it isn't stopping the likes of Canaan to go after a 1 billion dollar IPO in the near future.
Based on the estimates derived from the Bitcoin Energy Consumption Index, its carbon footprint for each individual transaction is about 450 kg of carbon dioxide, resulting in about 32,898 kilotons on a yearly basis. This leads to the question as to whether or not digital assets are really the way to go!