Bitcoin Mining Energy Consumption

Bitcoin Mining Energy Consumption

In recent years, we see a lot of hype when it comes to Bitcoin mining and its impact on energy consumption and pollution.

But is it really that bad? And is there a second side of the coin?

How much energy does Bitcoin mining consume?

Lots of articles have been published on this topic.

You can hear how Bitcoin mining spends as much electrical energy as a small country.

And it’s true. Bitcoin mining is indeed energy-intensive.

According to some estimates, around 91 terawatt-hours of electricity are spent per year by the Bitcoin network.

When we convert that to kilowatt-hours, the number looks scary indeed- 91000000000 kWh(91 billion kilowatt-hours).

So it’s true, Bitcoin mining does consume a lot of energy.

But the question is, does it really affect our environment that much?

And more importantly, how much does the alternative spends?

Bitcoin mining impact on the environment

Bitcoin mining spends lots of electricity, no doubts about that.

But does it necessarily have to impact the pollution in a negative way?

With China banning crypto mining in the June of 2021, most of the miners who use charcoal for electricity production have been seized.

Miners from those areas had to move to other countries or sell their equipment, which somewhat changed the structure of how energy is produced for Bitcoin mining.

Furthermore, it seems that lots of people who write on this topic neglect that Bitcoin miners are in for the long run, and do try to use renewable energy resources when possible(like wind and water).

Likewise, miners are exploring alternative ways of getting the energy, especially the one that otherwise gets wasted.

In states like Texas or Siberia, lots of gas gets wasted during the extraction of oil from the ground.

The amount of gas released during the excavation of oil isn’t tremendous, so for oil miners, it’s not economically justified to transport that gas to far destinations.

Yet, it makes perfect sense to set up Bitcoin miners at those exact locations, as the gas byproduct can be used for Bitcoin mining instead of being flared.

Basically, it’s a win-win situation.

It’s a process that won’t happen overnight, but my view is that crypto miners will adapt with time, and may even become one of the leaders in the green energy field.

Profit is a big motivator everywhere, and Bitcoin mining is no exception. If miners figure out that their profit will diminish due to environmental impact, then miners will logically lead the way to greener energy solutions.

How about banks and their impact?

If there’s one thing I don’t understand in this debate, it’s how much people neglect the primary purpose of Bitcoin.

When people ask me how electricity is spent on BTC mining, I like asking them a counter-question:

A lot, but how much electricity are the banks spending?

Some time ago, I was featured as a guest on one crypto website, which unfortunately got shut in the meantime.

And on that website, they featured my comment on the environmental impact of Bitcoin(along with other crypto guys).

The debate on Bitcoin energy consumption can hardly be realistic without involving the purpose of Bitcoin.

And what does the very first sentence in the Bitcoin manifesto say?

Abstract. A purely peer-to-peer version of electronic cash would allow online
payments to be sent directly from one party to another without going through a
financial institution.

Let me repeat the bolded part one more time: “without going through a financial institution“.

This is so important, that I can’t believe how many people are ignorant of this fact.

Bitcoin does spend lots of energy, but so does the current financial system we live in.

How much energy is consumed by banks throughout the world?

According to the data of the World Bank, the number of bank offices per 100.000 adults is 14.145.

The leading country in this regard is San Marino with 133.6 offices per 100.000 adults, while the last one is Ukraine with 0.4 bank offices per 100.000 adults.

If we discount the people younger than 20 years old, we are left with around 100%-33.2%=66.8% of the world population being adults.

66.8% percent of the total world population converts to around 7.9 billion * 0.668 or 5.2772 billion adults worldwide.

5.2772 billion / 100.000 adults = 527720 bank offices throughout the world(more than half million).

And that’s how we come to the important question of this chapter:

How much do 527720 bank offices spend on electricity per year?

This question isn’t that easy to answer, mostly because there’s a big difference between how much electricity is spent by a small and a big bank office.

But we can try :)

According to dcbel, an average household in the US spends around 11000 kilowatt-hours per year.

If we assume that a bank office spends just as much electricity as an average household in the US(which is not the case), we get the following number:

527720 * 11000 = 5804920000 kilowatt-hours per year(almost 6 billion kilowatt-hours).

But as you and I both know, an average household spends much less electricity than a bank office(even the smallest one).

This is because banks have lots of stuff going on 24 hours per day, like lighting, alarms, safety measures, ATMs, etc.

Furthermore, a bank office is usually filled with lots of devices like PCs, printers and so on.

Not much research has been done on this topic, so we have to get creative again:

According to ResearchGate, the average annual total energy consumption is 345 kWh/m2 for bank offices.

Then, according to Independent banker, the average area consumed by a bank branch has around 2,500 square feet or 232.25 square meters.

When we multiply the number of square meters by the energy consumption of banks per square meter, we get 345 * 232.25 = 80126 kilowatt-hours per year, per bank office.

527720 bank offices * 80126 kilowatt-hours = 42284092720 kilowatt-hours per year, or 42 billion kilowatt-hours.

If we stop the calculation here, then it turns out that Bitcoin mining is spending twice as much electricity as the banking sector, but once again, things aren’t that simple.

You see, Bitcoin uses machines to operate the transactions, and we already calculated their electricity usage.

But on the other side, banks are operated by people.

Even the smallest branch usually has at least 10 employees, accountants, security, cleaners, and director(s).

And all of them need to get on the job every day and get back home afterward.

It’s 2022, and most of them are using cars for this purpose. And as you know, cars are one of the biggest polluters on Earth.

And then, how about customers? For every bank office, there are literally thousands of customers that need to visit from time to time.

Sometimes they need to sign a contract, other times they need to withdraw the salary or pay some bills.

How do you think those thousands of customers are coming to the bank?

With all this in mind, I believe that Bitcoin mining is consuming less energy than the banking system.

Of course, I would love to hear your opinion, so if you have one, please submit it in the comments area below :)

 

Bitcoin Mining Energy Consumption

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