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Bitcoin Mining: Key Stat Exposes Ridiculous Energy Consumption FUD

Last Updated March 4, 2021 2:44 PM
P. H. Madore
Last Updated March 4, 2021 2:44 PM

By CCN.com: Antoine Le Calvez, a researcher for CoinMetrics , set out to determine how Bitcoin’s environmental impact compares to that of the auto industry. His striking conclusion? US vehicles consume roughly the same amount of energy in three days as Bitcoin has consumed in its entire existence.

The figure converts the energy used to propel cars and the amount of oil required (reportedly 1.3 million tons per day) to the amount of energy used to mine Bitcoin over the past ten years.

Crunching the Numbers on Bitcoin Mining: Harder Than it Looks

The comparative conclusion has some notable problems.

For one thing, the Antminer S9 (which is used to determine the amount of energy used by Bitcoin) is one of the most efficient Bitcoin miners ever devised. The first couple years of Bitcoin mining, which happened at a far lower difficulty (and therefore required fewer hashes, which translates to less overall energy) were done with average computers – many of them. A thousand regular computers will consume less energy than a thousand Antminer S9s, but they will produce less hashpower. The variance in hardware used to mine makes an actual calculation of energy consumed by Bitcoin mining hard to compile.

David Harding reckons you can account for the less efficient hardware and still figure out the difference:

Of course, little to no Bitcoin mining has ever actually been done with oil power. Coal power, on the other hand, has been used extensively in Bitcoin mining through outfits in China. It should be noted, however, that Chinese carbon emissions based on coal-fired power plants are lower than the United States, an oft-overlooked fact .

Bitcoin Mining: Environmental Impact Not as Bad as Skeptics Claim

Le Calvez’s conclusion conflicts with less rosy outlooks for Bitcoin as a massive energy-consumption effort. The carbon footprint of Bitcoin is real, but the hysterical proclamations that it’s using more energy than certain countries are both overblown and leave out important factors.

The environmental concerns about Bitcoin have led to the creation of several alternative algorithms, including proof-of-stake, which will be adopted by Ethereum in part due to the ecological concerns that mining presents.

It is precisely ecological concerns that drove BitTorrent creator Bram Cohen to create his Chia cryptocurrency, which will use available storage “farming” as an alternative means to generate and verify blocks.

The long-term sustainability of Bitcoin mining has other existential risks besides high energy consumption (and the prohibitive costs associated with it). The number of hardware producers in Bitcoin is minimal, with Bitmain remaining the largest.

Bitmain has faced difficulties since the bear market set in during 2018, and the company recently let its initial public offering filing expire. This follows reports of layoffs and potential board-room shake-ups. There are more recent reports that the company’s latest miners can’t be affordably produced at scale.

Trouble in the Crypto Mining Industry

Of course, there are always GPUs, which will be produced regardless of the status of the crypto markets. Ordinary graphics cards are produced and sold to both the gaming industry and average computer users. While their sales increased significantly during the crypto boom of 2017 (for mining on chains such as Ethereum and Monero), companies like nVidia, AMD, MSI, and other producers of GPUs are not wholly reliant on crypto miners for revenue.

While Le Calvez’s conclusion highlights the overall insignificance of Bitcoin’s carbon footprint as opposed to other industries, it doesn’t satisfy everyone operating in the space. Many feel that merely comparing Bitcoin to worse things is not a useful comparison – of course, there are more energy-intensive and wasteful industries, and they are not sustainable in the long-term for society, either.

The way the Bitcoin market works doesn’t help matters. You can have the most advanced and energy-efficient chips possible, and all it would lead to it is a much greater hashrate and difficulty, with potentially higher margins for Bitcoin miners. There’s no evidence that any increase in efficiency will lead to overall reduced energy consumption.

Bitcoin mining is a competitive industry. To compete, you must contribute as much hashpower as possible – and hashpower doesn’t exist without electricity, no matter how that electricity is produced. As market analyst Willy Woo points out, though, a massive move to solar energy could be the coup de grace for long-term sustainability in cryptocurrency mining: