Bitcoin Mining and Energy Consumption

June 04, 2024 - Bitcoin mining has been often criticized for allegedly consuming too much energy, but recent data have revealed a different narrative. As for the year 2023, the Cambridge Center for Alternative Finance (CCAF) at the University of Cambridge estimated an energy consumption level of around 120.00 TWh on a global scale of more than 27400 TWh.

This represents just 0.05% of the world’s total energy consumption, a fraction much smaller than often portrayed, which demonstrates that the focus on the topic of cryptos and their energy consumption should shift from the quantity of energy Bitcoin uses to the source of the power it consumes, thus highlighting the innovative use of otherwise wasted energy.

Unlike other industries, Bitcoin mining is relatively mobile, and therefore miners can set up new facilities easily and all over the world. As a result, miners can tap into stranded energy assets, even in remote areas, where the power they produce cannot be consumed by other types of industries thus using a surplus of energy that would be wasted otherwise.

Bitcoin mining encourages the utilization of abundant, cheap, and often wasted energy. This adaptability allows miners to relocate to areas where energy sources are plentiful but underutilized, such as hydroelectric power. Energies like hydroelectric are abundant and economical, making it a favored choice for Bitcoin miners. Before their arrival, much of this energy was being wasted due to the lack of storage technology or the impracticality of transportation, miners thus become innovative end-users, capitalizing on energy that would otherwise go to waste.

The 3rd Global Crypto Asset Benchmarking Study by the University of Cambridge in September 2020 found that 62% of miners used hydroelectric power as part of their energy mix. Overall, around 80% of respondents reported using renewable energy sources, indicating a significant reliance on renewable energy. This diverse energy portfolio highlights the industry’s efforts to combine renewable and non-renewable sources efficiently.

Therefore studies show how Bitcoin mining’s energy consumption is a minor fraction of global energy use, and its increasing reliance on renewable energy underscores a shift towards more sustainable and efficient energy practices. According to Cambridge studies, Bitcoin is responsible for barely 0,25% of worldwide GHG emissions, a similar amount to the emission of the gold industry and 25 times less than air conditioning per year.

In conclusion, the real discussion should focus on the innovative and sustainable ways Bitcoin miners utilize energies, rather than the volume of energy consumed.