Topic: Bitcoin Electricity Consumption (Read 455 times)

Bitcoin's total energy consumption is somewhere between 40 and 445 annualised terawatt hours (TWh), with a central estimate of about 130 terawatt hours.

They chose the right place to set up their bitcoin mining facilities and most of them choose the coldest place available to save both energy and to prolong the usage of their mining components. I think I have read that the best country to mine bitcoins is Iceland where the electricity cost is not that high and the people there are a little bit worried because of that. Because when those miners flock to go to that country then their electricity will face shortage and might end up an increase in fees.

I don't think that many people use CO2 as a measure of overall environmental impact. Rather, it is a measure relating directly to global warming. There are other factors in global warming and they can also be measured and acted on.

I think that environmental entropy production is far too abstract to be measured. How would you measure that quantity? If you can't measure it, then you can't really act on it.

The most important things for Bitcoin to work are the internet and electricity, if neither of them is confirmed Bitcoin will die. Actually, to make
Bitcoin transactions a large consumption of electricity is not required, which requires a large consumption of electricity when mining. Usually
there are many mining farms in countries where electricity costs are very cheap. So that's the reason why I sell all the mining equipment that
I have, because Bitcoin mining is no longer profitable now. I can't cover the electricity costs that I have to pay, because in my country electricity
costs are quite expensive.

I think CO2 has been commandeered as the go to metric for environmental impact because it occurs in a wide range of scaled processes. But it does paint a really incomplete picture of the situation. Perhaps a more holistic indicator could be something like environmental entropy production. Some metric that describes the rate of environmental disordering, which stresses the regulatory mechanisms that exist in our environmental ecosystem (e.g. CO2 absorption and transformation or pollinator populations that sustain flora populations).

So lets just use "impact" as a general term for human activity disordering the environmental state. Whilst the Bitcoin consumes electricity, it provides a valuable service. That is the security consensus of the PoW method which is enforced by thermodynamics. Some form of environmental impact in the form of electricity consumption, hardware manufacturing, etc. is of course acceptable. The amount of impact should be equal to the intrinsic value of processes that Bitcoin is used for (currently speculative, but the implementation horizon is fast approaching).

My quest is to find out that equilibrium point. how much impact should be deemed feasible at any given time?

My thoughts are that price is a contributor to the amount of impact. But as indicated by:

I will have to investigate the indirect relationship of price on impact

Yes! you are right. I wouldn't be surprised that other factors are apart of the equation, but that is a fair deviation from the base relationship between price and hashrate.
One extra factor from the top of my head is that mining rigs have become more efficient, therefore we are able to get more EH/KWh. The fact that miners have the choice to withhold their coins from the market in anticipation of a bull run is also a factor that makes things very non-linear.

This does not necessarily hold true, though. There is not a direct correlation between hash rate, price, and/or mining reward.

At the end of 2017, hashrate was around 14EH/s, price was $20k, and so block reward was $250,000 + fees.
At the end of 2018, hashrate had increased by three times and was around 40EH/s, but price had fallen by 80% to under $4k and block reward to $45k + fees.
Now, hashrate is at an all time high of 140EH/s, but with the halving, the block reward is $150,000 + fees.

So comparing today to 2017, hashrate is 10 times higher despite the total block reward in fiat being around half of what it was then.

Sorry for the late reply. Christmas season and all. Merry Christmas everyone

So interesting and diverse responses here, which is great. My thoughts on the points bought up:

POINT 1:

So from a game theoretic perspective of the miner, we can consider that they would like to increase the profit of their operation. The profit they make comes from fees of transactions included in the block and the block reward which is 6.25BTC. So as the price goes up, they can sell those BTC for cash to pay bills and re-invest in their operation. This chart shows the block reward in BTC and in USD dollar for a visual on how price effects a miners profit https://bitcoinvisuals.com/chain-block-reward.

Game theoretically, a miner wants to increase their chance of earning that block reward and fees by being the first to produce the block. This can be achieved by placing more hashing power on the network. So as the profit of a miner increases, they would put more hashing power the network to increase their chance of earning the next block's reward and fees. Of course they only do this to the point in which it is feasible, as hashing power uses electricity which costs money, contributing to the overheads of their business. Over time, as the block reward depletes via halvings, the significant source of income for a miner will be the transaction fees. At which point, people transacting on the BTC blockchain will determine how much hashing power exists on the network which provides security to the ledger, through their fees.

Here is the connection: as the price increases, miners put more hashing power on the network, the difficulty rises, which increases the computational power required to mine a block. computational power consumes electrical power. QED BTC price is connected to energy consumption. As this scales, it becomes a factor of consideration in environmentally sustainable operation.

EDIT: I will look through the posts to see other points and reply accordingly over time. Cheers

The CO2 provided by Bitcoin mining does not contaminate the environment than the CO2 produce by vehicles that used fossil fuels neither does it consume more energy than the energy used by the government to print money although Cryptocurrency mining added to the CO2 injected into the air but there are better solution put in place so if miners put environmental sustainability into practise it wont affect the price of Bitcoin market though so miners will be out of the game.

I agree, that the only way not just for the mining of cryptocurrencies but for the entire planet needs to mush strongly and quicker consider these eco-friendly options as alternative to fossil fuel.

It is a shame to see that after quite a few innovations  these sustainable sources haven't been added as the main source of electricity. Yh, it is expensive to develop the infrastructure but the effects of CO2 and subsequently its effects on the planet as many of us have seen today with so many more natural disasters, people losing their homes, species going extinct and reducing the clean air around is are all too big of a price to pay.

Something needs to be done now!

I see, has there been a research done to evaluate the ecological impacts with the displacement of wildlife and the destruction of flora and fauna? Some solar farms uses the heat from the sun instead of silicon solar panels (photovolatic) as a more efficient way to generate electricity (the one with a bunch of mirrors) and they do cause quite some ecological impact, dams and wind turbines has resulted in some wildlife species being affected as well. I think that would be a primary concern together with the carbon emissions.

I would think mining is ideal for places which already runs on renewable energy and has completely shifted from fossil fuels. If a portion of the energy production is still from fossil fuels, then it would make sense if you still consider the opportunity cost incurred in terms of the carbon emissions from coals and natural gas. AFAIK, most countries hasn't reached that stage yet and the power loss from long distance power transmission isn't that bad.

Thanks, I didn't think you were talking about funding in terms of it's R&D.

How do you plan to connect the price of bitcoin with the energy consumption or sustainability?

Price is determined by the supply and demand for bitcoin. The supply is pinched due to people valuing their stashes as an appreciating asset which also pays off bills. Whether energy consumption makes a difference to that? Guess, no.

The hash rate will always find equilibrium due to older hardware going offline and newer, more energy efficient hardware coming online. Till such time that the coinbase reward is too small to justify mining. In an ideal world, the fees on-chain would be sufficient for mining to stay profitable. But the world isn't ideal and we are already seeing that custodial bitcoin solutions are coming up with corporations increasing the number of bitcoin they can safely claim to hold. When enough wall-street type institutions have them, they can easily give people "representative tokens" against the bitcoin in their custody.

Banks and financial institutions are already engulfing bitcoin as another of their "product offerings".

They are very environmental friendly. Accounting for the carbon cost from production, installation, and lifetime operation, they produce over 20 times less CO₂ per kWh of energy generated than the most efficient coal plants. It is now at the stage where it is more environmental friendly to build new solar panels from scratch than it is to continue to run existing coal plants. The efficiency of solar panels and other renewable sources is continuing to increase over recent years, so these numbers are only going to become more marked over the coming years.

Yes, their production is not carbon neutral yet, but they are significantly better than oil, coal, gas, etc.

I'll also add a quote from CoinShares, from a different report to the one I linked above:

https://cbeci.org/mining_map
See statistics on bitcoin mining by country. Obviously, mining is developing in countries where electricity is very cheap.
I read articles by miners about solar and wind energy, which say that investing money in this equipment pays off for a very long time.
The cost of 1 kilowatt in these countries is less than 1 cent (except for the USA, probably). In such a situation, alternative sources of electricity are unprofitable.

That's an interesting perspective to consider as well. I wouldn't consider "green" energy as carbon neutral or completely environmentally friendly. Arguably, such infrastructure would benefit the economy primary. Green and renewable energy are ideal when they are able to replace the needs for traditional fossil fuel as a source of electrical generation. In fact, most solar farms, wind turbines, hydrodams, are not very environmentally friendly due to the fact that they will also contribute to the diminishing ecosystem or the production involves processes that are not carbon neutral.

In terms of economic impact, such projects will contribute significantly but if you're considering from the ecological perspective, I don't think the building or expansion of such infrastructure will actually benefit the environment at all and would perhaps bring about less than expected benefits for the economy, given that Bitcoin miners are seeking lower electrical rates and the construction and development of such facilities would bring about an increase in electrical prices and I doubt they will ROI in the short run.

Yes, but we've already seen above that bitcoin miners use significantly more green and renewable energy than standard computers and other appliances. In addition, there is evidence that bitcoin miners actually increase the production of green energy and the development of renewable infrastructure. You can't just stick solar panels in the middle of the desert or build a hydro plant 100km from civilization and expect to make a profit - you need people or facilities nearby that you can sell your energy too. Bitcoin miners can be placed anywhere, and so will buy energy from green sources which would otherwise be unprofitable. Because of this, bitcoin mining can lead to the development of new and existing renewable projects which otherwise would not exist.

I think his point is that the bitcoin miners consumes more electricity than those computer users that mainly use their devices with just searching or browsing. Remember the fact that miners need their devices to continue running 24/7 in order to mine passively with more outcomes. Hence, a household with atleast 15 drvices such as gadgets, appliances, etc are still consuming less than the bitcoin miners. I agree that we are already making this Earth more poluted but since he brought up this I think it should be considered by the bitcoin miners on how it affects Earth.

There are seasonal cycles with difficulty adjustments on the bitcoin network. It usually appears are late of the second quarter or very late months of every year. It is the time for floods, storms, etc. in China mainland. The most negative changes (< -10%) in history are recorded in October (2 times), December (2 times), and March (1 time).

There are lags between price and electricity cost estimates (I did not look at their methodology).


I used some multipliers from original values to make charts more visually comparable among some variables.

• The history of Bitcoin difficulty adjustment (in percent)
• Data sources:
  
  • cbeci.org: for the estimates of max, min, guess electricity costs (TWh)
  • coinmarketcap.com/currencies/bitcoin: price of bitcoin
  • loyce.club/blockdata/difficulty.txt: Difficulty

I think it's a pretty common myth but the construction of most renewable energy will actually incur some form of environmental degradation, CO2 or not. Solar panels don't just lay around and the manufacturing of the panels will essentially produce some pollution and it will take some time for the benefits of a solar panel to outweigh the environmental costs of it. It's obviously not without it's problem.

It would be wrong to assume that just because some mining operations uses renewable energy, all of the energy inputs are green energy. The issue on hand is that the electrical energy that could otherwise have been used for other purposes were used for Bitcoin mining. I wouldn't say it's completely invalid to attribute the CO2 production to Bitcoin mining because they use a ton of electricity and the production of which produces greenhouse gases.

No, CO2 production will never stop. But if Bitcoin mining doesn't use electricity, then the reliance on coal energy and/or natural gas would be lesser since that the energy requirements of the country would be lower.

To some extent, the above argument will hold water. But it's important to consider the transaction volume of Bitcoin on a daily basis.

I would disagree, somewhat.  While making money is critical, the current investment movement is towards green and away from hydrocarbons.  Companies like Tesla get stratospheric price to sales ratios while industrials and others sell for below book value.

In other words, making $10 in an oil an gas company actually rewards you LESS than making $10 in a EV or Solar company.  Your elementary approach is limited and does not take this into account.