The digital world still lives under the illusion that it is intangible. As governments gathered in Paris at COP21 in 2015, pledging to reduce their carbon emissions to keep global warming below 2°C, the spread of digital technology continued to take place without the slightest concern for the environment. The current popularity of the bitcoin and blockchain provide the perfect example.
The principle of the blockchain can be summarized as follows: each transaction is recorded in thousands of accounting ledgers, and each one is scrutinized by a different observer. Yet no mention is made of the energy footprint of this unprecedented ledger of transactions, or of the energy footprint of the new “virtual currency” (the bitcoin) it manages.
Electricity consumption equivalent to that of Ireland
In a 2014 study, Karl J. O’Dwyer and David Malone showed that the consumption of the bitcoin network was likely to be approximately equivalent to the electricity consumption of a country like Ireland, i.e. an estimated 3GW.
Imagine the consequences if this type of bitcoin currency becomes widespread. The global money supply in circulation is estimated at $11,000 billion. The corresponding energy consumption should therefore exceed 4,000GW, which is eight times the electricity consumption of France and twice that of the United States. It is not without reason that a recent headline on the Novethic website proclaimed “The bitcoin, a burden for the climate”.
What do the numbers say?
Since every blockchain is a ledger (and therefore a file) that exists in many copies, the computer resources required for the calculation, transmission and storage of the information increases, as well as the energy footprint, even if improvements in the underlying technologies are taken into account.
The two important factors here are the length of the blockchain and the number of copies. For the bitcoin, the blockchain’s length grew very quickly: according to Quandl, it was 27GB in early 2015 and rose to 74 by mid-2016.
The bitcoin, whose system is modeled on that of the former gold standard currencies, is generated through complex computer transactions, which become increasingly complex over time, as for an increasingly depleted goldmine in which production costs rise.
In 2015, Genesis Mining revealed in Business Insider that it was one of the most energy-consuming companies in Iceland, with electricity costs of 60dollars per “extracted” bitcoin – despite benefiting from a low price per kWh and a favorable climate.
Finally, we can also imagine all the “smart contract” type applications supported by the Internet of Things. This will also have a considerable impact on energy and the environment, considering the manufacturing requirements, the electrical supply (often autonomous, and therefore complicated and not very efficient) and disposal.
However, although the majority of connected objects will probably not support smart contracts, a very large amount of connected objects are anticipated in the near future, with a total likely to reach 30billion in 2020, according to McKinsey, the American consulting firm.
The bitcoin is just one of the many systems being developed without concern for their energy impact. In response to the climate issue, their promoters act as if it does not exist, or as if alternative energy solutions existed.
An increasingly high price to pay
Yet decarbonizing the energy system is a vast issue, involving major risks. And the proposed technical solutions in this area offer no guarantees of being able to handle the massive and global increase in energy consumption, while still reducing greenhouse gas emissions.
Digital technology already accounts for approximately 15% of the national electricity consumption in France, and consumes as much energy, on the global scale, as aviation. Today, nothing suggests that there will be a decrease in the mass to be absorbed, nor is there any indication that digital technology will enable a reduction in consumption, as industrialists in this sector have confirmed (see the publication titled La Face cachée du numérique – “The hidden face of digital technology”).
The massive decarbonation of energy faces many challenges: the reliability of the many different carbon sequestration techniques proposed, the “energy cannibalism” involved in the launch of renewable energies, which require energy to be manufactured and have technical, social, and political limitations (for example, the various sources of renewable energy require large surface areas, yet the space that could potentially be used is largely occupied)… The challenges are huge.
FAQs
Of course, crypto is more than just Bitcoin. The energy consumption of all crypto assets combined is between 0.4% and 0.9% of annual global electricity usage, or 120 and 240 billion kilowatt-hours per year. That's more energy usage than all the world's data centers combined.
Does Bitcoin really use a lot of energy? ›
Bitcoin alone is estimated to consume 127 terawatt-hours (TWh) a year — more than many countries, including Norway. In the United States, cryptocurrency activity is estimated to emit from 25 to 50 million tons of CO2 each year, on par with the annual emissions from diesel fuel used by US railroads.
Can Bitcoin become more energy efficient? ›
In theory, a greener bitcoin is possible. The digital coin's energy consumption is tied to its underlying “proof-of-work” protocol (PoW). This is the decentralised consensus mechanism that secures the currency and prevents fraud or hacking, in the absence of oversight from banks or another centralised body.
How much CO2 does Bitcoin produce? ›
A 2022 non-peer-reviewed commentary published in Joule estimated that bitcoin mining resulted in annual carbon emission of 65 Mt CO 2, representing 0.2% of global emissions, which is comparable to the level of emissions of Greece.
Why do blockchains use so much electricity? ›
The big problem with blockchains and energy use
The reasons are complex, but the result is simple: As more mining capacity joins the network, the PoW puzzles have to be made harder. This way, it still takes the same amount of time to solve them; it just takes more energy.
How bad is crypto mining for the environment? ›
For example, that amount of power exceeds the combined electricity consumption of Argentina and the Philippines. That intense energy translates to massive levels of greenhouse gases. Bitcoin mining processes produced 85.89 MTCO2E, or metric tons of carbon dioxide equivalent, from 2020 to 2021, according to the study.
How much electricity does it take to mine 1 Bitcoin? ›
The New York Times recently equated the total power consumed by Bitcoin annually to what's used by Finland in one year. The fact is that even the most efficient Bitcoin mining operation takes roughly 155,000 kWh to mine one Bitcoin. By way of comparison, the average US household consumes about 900 kWh per month.
How much energy does Bitcoin use vs banking? ›
Bitcoin.com claims the traditional banking sector uses about 2x as much energy. But cryptocurrency handles a tiny, tiny fraction of worldwide banking stuff, so if it was operating at the scale of e.g. 20,000 qps of credit card transactions, for example, it might have substantially higher energy use compared to now.
Does bitcoin mining increase the electric bill? ›
Energy-intensive crypto mining has strained local electric grids, raised electricity rates for residents, increased local air and water pollution, and prompted noise complaints from neighbors across the U.S.
How does blockchain affect the climate? ›
Non-fungible tokens (NFTs) and ordinals are assets that are tokenized using a blockchain. Because blockchains use energy, NFTs can contribute to greenhouse gas emissions and climate change through their production, exchange, and storage.
According to a recent report by KPMG, bitcoin mining stabilizes power grids and leverages underused renewable energy sources. The report further states that bitcoin can reduce methane emissions by converting waste gases into electricity.
What industry uses more energy than Bitcoin? ›
According to his report, power consumption of the traditional banking sector stands at a whopping 4,981 TWh, more than 50 times more energy than Bitcoin.
What will happen when 100% of Bitcoin is mined? ›
The block subsidy will go to zero but miners will continue to receive transaction fees, which will make up an ever greater portion of the block reward. Miner revenue and thus, Bitcoin security will become entirely reliant on these transaction fees.
Is bitcoin mining a waste of resources? ›
Subsequently, global BTC mining emitted more than 85.89 Mt of CO2eq from 2020 to 2021, equivalent to carbon emissions from 84 billion pounds of coal burned, 190 natural gas-fired power plants, or over 25 million tons of landfilled waste.
Is Bitcoin a waste of resources? ›
However, the energy consumption of certain blockchain networks like Bitcoin, Litecoin, Monero, Zcash, and others has generated apprehensions regarding the sustainability of this technology. Bitcoin alone consumes approximately 100 terawatt-hours annually, contributing significantly to global carbon emissions.
Is blockchain energy consuming? ›
How much energy does blockchain use? So much that if miners were a country, they would rank 41st in energy consumption, almost as much as Austria. So much that mining generates as many carbon the city of Las Vegas or Hamburg.
How much power does the Ethereum blockchain use? ›
CCAF estimates Ethereum will consume 6.56 GWh of electricity annually. To put that into perspective, the annual electricity consumption of the Eiffel Tower is 6.70 GWh, while keeping the lights on for a year at the British Museum requires 14.48 GWh.
How much energy does NFT blockchain use? ›
NFTs consume energy throughout their lifecycle, from the time they're created -- or minted -- through their subsequent sales and transactions and their perpetual storage online. All of that is energy-intensive. The most energy-intensive blockchains are those that use a consensus mechanism known as proof of work.
