Right now, organizations around the world are facing pressure to limit the consumption of non-renewable energy sources and carbon emissions into the atmosphere. But determining what consumption is excessive is a complex issue intertwined with debates about our priorities as a society. Ultimately, deciding what goods and services are "worth" spending these resources on is actually a question of values. As the popularity of cryptocurrencies, and Bitcoin in particular, grows, energy use has become the latest hot topic in the broader conversation about what and for whom digital currencies are truly useful.
How much energy does Bitcoin mining consume?
At first glance, the question of energy use seems fair. According to the Cambridge Center for Alternative Finance (CCAF), Bitcoin currently consumes about 110 Terawatt-hours per year - 0.55% of global electricity production, or roughly equivalent to the annual energy consumption of small countries like Malaysia or Sweden. This, of course, sounds like a lot of energy consumption. But how much energy should a monetary system consume?
How you answer this question likely depends on how you view Bitcoin. If you believe that Bitcoin offers no utility other than as a Ponzi scheme or a money laundering device, it would be logical to conclude that any energy consumption is wasteful. If you are one of the tens of millions of people worldwide using IT as a tool to avoid monetary repression, inflation, or capital movement control, you probably believe the energy is used extremely efficiently. Whether you believe Bitcoin has a legitimate claim to society's resources depends on the value you believe Bitcoin creates for society.
Bitcoin's energy consumption is relatively easy to estimate: You can simply look at its hash rate (i.e., the total aggregate computing power used for Bitcoin mining and transaction processing) and then make some informed assumptions about the energy consumption of the equipment miners use. But determining its carbon dioxide emissions is much harder. Cryptocurrency mining is a highly competitive business, and miners typically aren't very forthcoming about the details of their operations. The best energy production geolocation estimates (on which one can infer the energy consumption structure) come from CCAF, which collaborated with major mining pools to collect an anonymized dataset on miner locations.
Bitcoin mining consumes much more energy than its use
How energy is produced is one part of the equation. But another area where misconceptions abound is how Bitcoin actually consumes energy and how this is likely to change over time.
Many journalists and scholars talk about Bitcoin's high "energy cost per transaction", but this metric is misleading. The vast majority of Bitcoin's energy consumption occurs during mining. Once coins are issued, the energy costs required to confirm transactions are minimal. So, simply looking at Bitcoin's total energy consumption today and dividing it by the number of transactions doesn't make sense - most of that energy was used to mine Bitcoins, not to support transactions. And this leads us to the last critical misconception: that the electricity costs associated with Bitcoin mining will continue to grow exponentially.
How much does a mining farm consume?
A mining farm is a complex system consisting of many components, each contributing to cryptocurrency mining. The power consumption of such a farm largely depends on the chosen components and their quantity. For instance, a farm based on NVIDIA GeForce RTX 3080 graphics cards consumes much more electricity than a farm based on older models. On average, such a farm can consume from 1000 to 1500 watts per hour, making it one of the most "power-hungry" in terms of electricity.
How much does an ASIC consume?
An ASIC is a device specifically designed for cryptocurrency mining. They are usually more efficient than regular graphics cards, but their power consumption can also be quite high. For example, the popular ASIC Bitmain Antminer S19 Pro consumes about 3250 watts. On the other hand, a less powerful ASIC, such as the Bitmain Antminer S9, consumes about 1375 watts. Additionally, it's worth noting that over time and with component wear, the efficiency of an ASIC can decrease, which in turn can lead to increased power consumption. Therefore, regular maintenance and monitoring of the device play a key role in optimizing electricity costs.
The impact of power consumption on the environment
Many don't realize that cryptocurrency mining can impact the environment. The high power consumption of ASICs and mining farms leads to increased carbon dioxide emissions if electricity is produced from fossil sources. This threatens the ecological balance and exacerbates the problem of global warming. However, public opinion is starting to change, and more and more people are realizing the importance of environmentally sustainable mining. This encourages the industry to seek greener solutions and methods for cryptocurrency mining.
Conclusion
The future of mining and energy efficiency With the advancement of technology and the increasing complexity of cryptocurrency mining, energy efficiency becomes a key factor for successful mining. Equipment manufacturers are actively researching new technologies to create more efficient and less power-consuming devices. In the future, we can expect new models of ASICs and graphics cards that will consume much less electricity while maintaining high performance. We should also anticipate the development of energy storage technologies, allowing miners to accumulate energy during surplus periods and use it during deficit periods, making the mining process even more efficient.
Which mining farm to buy