Bitcoin is a digital currency powered by many computers around the world working to maintain the Bitcoin blockchain, a public database of all transactions on the network ever made. Bitcoin miners compete to officially record and verify the transaction and earn bitcoin as a reward.
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.
- The computers that record and verify Bitcoin transactions consume power at a level similar to some countries.
- The exact amount of power used by a Bitcoin transaction can vary based on demand.
- The environmental impact of the Bitcoin network depends on power consumption, the kind of energy powering the network, and the electronic waste it generates.
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.
Hashrate is the measure of how fast a computer is working on Bitcoin mining, usually calculated per second. For example, 1 Mhash/s indicates 1 million hash calculations are done every second.
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:
- Hardware computing power
- Network hash rate
- Mining difficulty
- Thermal regulation for the hardware
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?
So exactly how much power does it take to create a bitcoin? According to Digiconomist, as of July 15, 2021, a single Bitcoin block requires 1,721.96 kWh, or nearly $26,000. When you put it all together, that’s a projection of 135.12 TWh in the year, or about as much power as is used annually by the country of Sweden.
A different estimate from the University of Cambridge pegs Bitcoin’s annual energy usage at around 70 TWh as of July 15, 2021, which is about 0.32% of the total power usage on earth and a little more than the annual power consumed by Austria.
Here’s a look at Bitcoin’s energy consumption (even at the lower end of 70 TWh) compared to the 2019 electricity consumption of some countries based on data from the U.S. Energy Information Administration (U.S. EIA):
|Country||Annual Energy Consumption (in TWh)|
Clearly, this is a ton of electricity, which has many people concerned, including Elon Musk. In May 2021, the Tesla chairman tweeted his concerns about Bitcoin’s dependence on fossil fuels and suspended the sale of Tesla cars in exchange for Bitcoin. Just a month later, Musk tweeted that Tesla would resume Bitcoin transactions when there’s “confirmation of reasonable (~50%) clean energy usage by miners.”
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, recent government action in China 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.
According to Digiconomist, the carbon footprint of a single Bitcoin block in 2021 is roughly 816 kilograms of carbon dioxide equivalent (CO2), or roughly equal to the carbon footprint generated by 1,808,913 Visa transactions or watching 136,028 hours of Youtube videos. Bitcoin network’s annual carbon footprint is 64.18 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.
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 2021 a single Bitcoin block yields 77.80 grams of electronic waste or the equivalent weight of 1.72 golf balls.
Some components of the mining equipment also include metals such as aluminum, copper, iron, and rare earth metals. Some researchers believe that less than ideal recycling and waste collection in countries that have large mining operations could create a risk of toxic metals polluting the soil, water, and air in those countries.
The energy-intensive method behind Bitcoin, known as “proof of work" (PoW) has competitors that may come with lower electricity use, including cryptocurrencies like ETH, XRP, Cardano, and Stellar, which use a different consensus mechanism known as "proof of stake" (PoS) and special protocols such as the Stellar Consensus Protocol (SCP), designed for faster transactions and lower electricity usage.
For those 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, including the addition of more efficient currencies and upgrades to existing networks, like Ethereum 2.0, 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.
Frequently Asked Questions (FAQs)
How long does it take to mine one bitcoin?
The time it takes to mine a bitcoin depends on the computer being used to mine it. A mining company with an arsenal of top-of-the-line hardware may mine multiple bitcoins within an hour. A more reasonably priced mining rig might take a month or more to mine a single bitcoin.
Why does bitcoin use so much energy?
In general, bitcoin uses a lot of energy because of competition among miners and wider network activity. Miners must use large amounts of energy because they're racing against each other to be the first one to solve the equation that earns them a bitcoin. Miners seek out bigger and faster computers that use more energy as they solve equations at a quicker rate. They also must solve more equations when the number of transactions on the bitcoin network increases.