Bitcoin mining network consumes more electricity a year than Ireland
Bitcoin's mining network is incredibly energy-intensive. Its energy use exceeds that of 19 other European countries, which is equal to more than five times the output of Europe's largest windfarm.
90% of bitcoin's costs go to electricity. Nevertheless, Dr. Kelly-Pitou from the University of Pittsburgh insists that the debate surrounding bitcoin's energy consumption has been oversimplified.
All new technologies are energy-intensive. The environmental argument could therefore be construed as a way to advance false claims about the controversial cryptocurrency.
Decentralised blockchains and currencies could completely alter the landscape of trust in business. Despite this, many people remain dubious towards the technology.
According to Digiconomist, the estimated power use of the bitcoin network is 30.14TWh a year. This accounts for verifying transactions made with the cryptocurrency, and each individual bitcoin transaction uses nearly 300KWh of electricity.
Dr. Kelly-Pitou insists that increased energy efficiency is a natural progression for any technology. Discussion should therefore centre around who is producing this energy, and where the power comes from.
She stated “new technologies — such as data centers, computers and before them trains, planes and automobiles — are often energy-intensive. Over time, all of these have become more efficient, a natural progression of any technology: Saving energy equates to saving costs.”
Bitcoin mining also releases 20 megatons of CO2 into the atmosphere annually, equal to the output of the Republic of Ireland. The more energy burned, the faster a computer can commutate and “win” bitcoins.
Nonetheless, Dr. Kelly-Pitou points out that banking uses an estimated 100 terrawatts of power annually. “If bitcoin technology were to mature by more than 100 times its current market size, it will still equal only 2% of all energy consumption.”
Around 80% of miners' winnings are invested back into electricity consumption, according to a Credit Suisse report. If the entire network were to reinvest bitcoin back into its electricity consumption, we could face a colossal environmental predicament.
However, Dr. Kelly-Pitou raises the important question of whether an increase in power equals an increase in the world's carbon consumption. Bitcoin miners have traditionally established hubs in China, where coal supplies 60% of the nation's electricity.
On the other hand, Iceland's bitcoin industry runs on 100% renewable energy. Vast quantities of geothermal and hydropower energy have allowed Iceland to remove fossil-based electricity sources.
Therefore, bitcoin is not necessarily the issue. As Dr. Kelly-Pitou argues “not all types of energy generation are equal in their impact on the environment, nor does the world uniformly rely on the same types of generation across states and markets.”
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