Energy consumption for cryptocurrency mining may be 146 percent higher, but inconsistent studies make it difficult to make a conclusive assessment. To date, prospecting is thought to involve 125 TWh of energy use annually – Bitcoin may only be 50.8 TWh, though research data varies widely -banking is 650 TWh annually.
Bitcoin, climate killer or even climate savior? The amount of BTC that are traded on big exchanges like Binance has increased a lot in recent years. While some believe that the resource-intensive technology should be shut down immediately, others emphasize that Bitcoin miners largely rely on green power, and more than that, even push the renewable turnaround.
Just recently, Tesla CEO Elon Musk denounced Bitcoin’s negative energy balance. But what is the actual state of consumption? Research provides answers to this question that could hardly be more different. While a survey by the University of Cambridge shows that the annual Bitcoin energy consumption amounts to about 143.67 terawatt hours (TWh), Dan Held & ARK Investment come to the conclusion that it is only 50.8 TWh.
If we take the second value, Bitcoin, for example, would be anything but bad compared to the precious metal gold: here, the estimated annual energy consumption expended is 125 TWh, as the infographic points out. The banking system requires about 650 TWh per year – however, it should be mentioned at this point that an absolute comparison is not very meaningful, as the number of transactions and use cases differ considerably.
Miners prefer China
The fact that a large number of Bitcoin miners have settled in China has caused loud criticism. The Middle Kingdom accounts for 65.08 percent of the monthly hashrate. This is potentially problematic because cheap coal-fired power in China has an unfavorable carbon footprint. However, this is merely a snapshot.
Already, 76 percent of Bitcoin miners rely on renewable energy. However, a second look is needed here: the fact that those rely on green power does not mean that the mining facilities are exclusively powered by it. As the infographic points out, it is estimated that about 39 percent of mining electricity is actually green, but there are varying numbers circulating on this as well.
Numerous players in the crypto industry are acutely aware of environmental issues, and various projects bear witness to this. Genesis Mining, for example, uses heat generated from crypto mining to heat greenhouses in Sweden. Bitfury Group, on the other hand, uses surplus electricity from powerful hydroelectric plants for bitcoin mining. Furthermore, not only the IOTA Foundation has taken up the cause of sustainability, the founder of the second largest cryptocurrency by market capitalization, Ethereum, is also pushing for an update. For example, Ethereum will soon go “from consuming the energy of a medium-sized country to consuming the energy of a village.”
Cryptocurrencies do consume energy. How much, however, is a matter of dispute among researchers. Even more controversial, however, is the question of whether those costs exceed the benefits. The fact that numerous Bitcoin players recognize the signs of the times and are switching to sustainable energies and pushing alternative concepts shows that the energy balance is not set in stone: after all, they do not want to saw off the branch they are sitting on. There is little doubt about one thing: while the power consumption of cryptocurrencies is on everyone’s lips, discussions about the resource requirements of a large number of other products and technologies are only being held on the periphery.