Technology has made huge leaps in innovation and creating ease of life in the past decade. However, in this technological boom, we have also had increases in spending electrical resources often by non-renewable sources. Bitcoin and other cryptocurrencies get a lot of bad press in the media about how much electricity Proof of Work (PoW) mining uses but does that criticism have any merit? Well, bitcoin mining and power use are exactly what we plan on delving into within this piece.
One of the concerns about Bitcoin that the media expresses regularly is the “huge” amount of energy the validation network uses. I argue that the energy used by this network is actually more efficient and better suited to world economies than our current electronic fiat system.
Relative Energy Usage
The graph above expresses both specific and relative electricity use annually in terawatt-hours per year. Facebook – the social media platform used about 1.83 Terawatt hours annually back in 2016. Facebook is a use of electricity that is predominantly used to transfer, process and store videos and images along with processing and serving feed and notification updates. Bitcoin, on the other hand, uses even at the highest current estimates 25 terawatt hours annually. Most believe the total use of electricity for Bitcoin is significantly lower than that given due to the relatively recent changes in mining technology. Though this estimation seems like a very high amount of energy to use in comparison to Facebook, estimations of the bank’s use of energy dwarf Bitcoin’s use. By even a conservative estimation bank will use 98 terawatt-hours of electricity this year alone. This includes the power used to light the estimated number of open branches, computer systems, ATMs, transactions, and such.
Relative World Energy Use
It is easy to get lost in the confusion of the next hot argument. However when we take all the data together and gain perspective – often the big picture comes into focus. Bitcoin in its entirety uses a fraction of one percent of the world’s energy production. World production of energy has been calculated in 2016 to be 24,353 terawatt hours annually. In comparison to the total world production, even the total use of banks is made to look minuscule. In fact, the internet, in general, is calculated to use roughly 5% of the total world’s energy production. We seldom see much published discussing the high volume electrical use that comes from the internet. When we look into bitcoin mining and power use we see that it uses a relatively small amount in comparison to the use energy by banks.
With all of this being said, we cannot deny that the energy used by these services are relatively high given a single home vantage point of most readers. We cannot argue that using terawatts of electricity produced using non-renewable resources is an intelligent move. Cryptocurrency miners should predominantly build mining centers powered by green power like hydroelectricity. This keeps prices low and environmental impact even lower. Additionally, if available miners can use the heat produced by mining cryptocurrencies to heat small offices to large warehouses providing an added value to mining cryptos like Bitcoin. This process of heat-recovery is but one method that could be used to stay at the forefront of innovation.
Bitcoin Mining and Power Use Conclusion
Mining bitcoin is overshadowed by the electricity used by the internet. Bitcoin is absolutely dwarfed by the electricity used by banks worldwide. This trend will likely continue as cryptocurrency mining continues to evolve and become more efficient. Banks have been around long enough to have found a homeostatic power usage. Without Bitcoin or other cryptocurrency miners pushing banks to source energy from more green sources then Banks may continue to use massively high levels of non-renewable energy sources.