Bitcoin Energy Consumption Myths

[notblox1]

We all heard stories that Bitcoin spends energy like Switzerland, and that all contributes to global warning a lot, but is all that true?
No, it is all myths and twisted repetitions we here from journalists who are just trying to get more attention.
Let's take a look what is reality and what is myth.

First myth: Energy

Most articles use word ''energy'', but only thing that matters for Bitcoin is electricity. For example this Vice article
Energy should not be mixed with electricity, for example we can have several energy sources in our houses including gas.
Does Bitcoin transaction consumes electricity, gas and gasoline?
Then we can see in this BBC article, they say how Bitcoin consumes energy equal of Switzerland.
If you don’t drive a car or you don't have gas at home, energy consumption means only electricity for you, but you can not say the same thing for whole country.
Electricity is only around fifth of the world’s energy, but we don't use any fuels for Bitcoin transactions.

Myth Two: It will only get worse

It is opposite from that, and Bitcoin will probably burn less electricity in the future.
There will be total of 21 million Bitcoins, and every four years there is reward halving, and after the last halving, it is now 6.25 BTC.
In order to burn the same amount of electricity, the price of bitcoin must double in dollar value every four years.

In this article from journal Nature they say that Bitcoin would warm the planet by 2°C by 2033.
They don't explain how exactly in article, but they just assume that more electricity will be burned. If we divide their numbers, and pay the miners, one bitcoin will have to  be $160 million in 2033.
Looks like myths are spread by journalists and scientists too.

Myth Three: A Comparison of the Incomparable

''The carbon footprint of a single transaction is the same as 780,650 Visa transactions,'' says this article in The Telegraph.
Problem here is that journalist are comparing average cost of Bitcoin with the marginal cost of Visa.
Should we also take the cost of all world banks, employees, cards, terminals, etc. and divide it by the number of transactions?
Bitcoin transactions may not be as cheap, but monetary system is also not cheap, and in case of Bitcoin we have full control of our money.

Bonus Myth: It’s useless

There is now over 18.5 million mined Bitcoins since 2009. How much energy did it cost us to create those bitcoins?
We can never know exactly, let's take the number from authors calculations and around $200 billion.
It’s a lot of money, but that is only about 2% of the US Federal budget for social security, or 3% of US Federal defense spending, or 4 presidential elections in the US.

No wonder mining is concentrated in places with excess electricity, like oil extraction sites or hydropower plants in China.
We do not want to waste scarce resources but no need for inventing myths and fairy tales around this subject.

Information is used from original trezor blog and Dominik Stroukal:
https://blog.trezor.io/three-myths-about-bitcoins-energy-consumption-ef613a1f3d5

[SquirrelJulietGarden]

Myth Two: It will only get worse

It is opposite from that, and Bitcoin will probably burn less electricity in the future.
There will be total of 21 million Bitcoins, and every four years there is reward halving, and after the last halving, it is now 6.25 BTC.
In order to burn the same amount of electricity, the price of bitcoin must double in dollar value every four years.

The energy consumption is from total mining rigs are used to mine bitcoin and confirm bitcoin transactions. It depends on network hashrates and not depend on block reward. If the hashrate is the same next 12 years, the energy consumption from all active bitcoin mining rigs will be the same as of now.

I don't catch their myth why bitcoin price has to double in dollar because of halving and if it happens, the energy consumption will be the same for each 4 years. Their opinion is a myth.

[fiulpro]

See the thing is there are numerous resources but until and unless you are not going to use renewal sources of energy you won't be able to state the fact one as a myth. You should understand that Bitcoins does use energy and it's completely true to say that it causes global warming ... Most of the miners are using electricity as a source of energy. In the future ofcourse this will be fixed...since we won't have to mine more and at the same time it would it only be used for transactions, their confirmations.

Plus we have to realize that people have to start using renewable sources of energy along with the normal electricity to make it work....

One must realize where they are living them go ahead as see what they can use, at some parts it would be wind energy, at some parts it would be solar energy. It's all different.

[20kevin20]

Some people are against Bitcoin specifically due to the large amount of energy consumed, but we're going fully digital in all domains anyway and nothing is perfect.

An interesting comparison is how Bitcoin mining energy consumption compares to the consumption of electrical cars:

Miners of bitcoin and other cryptocurrencies could require up to 140 terawatt-hours of electricity in 2018, about 0.6 percent of the global total, Morgan Stanley analysts led by Nicholas Ashworth wrote in a note Wednesday.

Source: https://www.bloomberg.com/news/articles/2018-01-10/bitcoin-outshines-electric-cars-as-driver-of-global-power-use

If virtually all passenger cars in Texas were electrified today, the state would need approximately 110 more terawatt-hours of electricity per year — the average annual electricity consumption of 11 million homes.

Source: https://www.inverse.com/article/51486-electric-cars-demand-better-infrastructure

Electric cars are advertised literally everywhere as eco-friendly vehicles, yet from this perspective, it's not as fun as it sounds. We're saving the environment from the damage done by non-electric vehicles only to replace the damage with the one done by EVs.

The thing is, this is the only way we can have a fair currency that doesn't provide certain categories of the population an advantage. Be it rich, poor, a CEO or a garbage truck guy, you can own and use Bitcoin whenever and however you like.

[kryptqnick]

I think that high energy consumption is not something that can be denied, but I don't think there's consensus on how much of that electricity comes from clean energy. In many cases I agree with the 'reduce' principle. Reducing the amount of trash, cars, factories, meat and other things make sense to me. However, I don't think this can reasonably apply to electricity. With technological development and accessibility, humanity will consume more and more energy. So we should focus on making it clean and not overusing it when it's absolutely useless (like when the lights are on in every room, but you're actually sitting only in one of them), but not on blaming some things altogether because they require a lot of energy.

[NeuroticFish]

We all heard stories that Bitcoin spends energy like Switzerland

Let's start with the start: it's not Bitcoin eating up that energy, it's (crypto mining) companies and individuals that use that energy, (usually) pay for it and earn money off it.
And now ... how my energy does US dollar "eating up"?
Or how much energy does the banking system use?

All I want to point out (once again) is that the news and numbers about "Bitcoin energy consumption" are unfair/incorrect (they compare apples with oranges) and all the predictions are completely useless.
But news writers have to write something (how much energy do newspaper waste?) and some will always write against Bitcoin too (whether they're paid to do so or they are genuinely convinced that Bitcoin must be evil).

[coolcoinz]

Good summary OP.
What I'd like to add to this is that saying that Bitcoin uses energy should not be a negative point. There are finite and infinite energy sources. While oil is finite, energy produced from the sun is not and with enough solar panels the netwok can be supported indefinitely. As long as Bitcoin mining can finance the production of these panels, it's all fine.
People who use such arguments to attack Bitcoin are dumb.

[SquirrelJulietGarden]

People only talk about the energy consumption from mining rigs and other equipments in mining farms but they don't talk about energy consumption from bank systems. Energy will be consumed by national central banks (in buildings, for staffs - ventilation, air conditioners, ...) or money printing factories. Maybe more things will consumed energy.

I don't know bitcoin network or bank systems consume more energy. I think bitcoin network consumes less energy because things are confirmed online and require less sources for human, staffs, buildings, offices, and other things need energy or electricity.

[Twentyonepaylots]

The first myth was because people don't understood it that good, as well as science terms like energy and electricity. They might have coined it using "energy" because electricity is a form of energy, too bad people easily believe on what they have seen written on the internet and they will hold that information til someone brings it up to them. Although it's not so wrong, but specifying is the real thing that we must spread on the internnet.

[stompix]

And now ... how my energy does US dollar "eating up"?
Or how much energy does the banking system use?

How much energy does a bank with 400k transactions a day (that's about 1/5 ) of the population of Bucharest if I remember correctly consume?
And don't!!! come with the story about how bitcoin usage will grow, the moment millions will be using the price will go up by x10 and the reward will allow miners to burn at least x10 at the same profit rate.

Right now no matter how you try to paint it yes, BTC relies on printing money (block reward) for its safety. If it were for the money printing and it would rely only on fees the network hash rate would be from 1/10to 1/5 (right now because of the huge fees) and so would be the electrical consumption.

And seriously, what is with all this whataboutism?
Why can't bitcoiners discuss something without immediately shouting: WHAT ABOUT BANKS?

[NeuroticFish]

Why can't bitcoiners discuss something without immediately shouting: WHAT ABOUT BANKS?

You're right, but you've got my sentences out of context imho.

Both "Bitcoin consumes as much as whatever country" and "how about banks" are wrong. Bitcoin miners and also the banks are businesses that pay for the electricity they use and make profit. Some go out of business (on both "sides") and Bitcoin and fiat will still exist. And there are plenty of businesses that use the electricity well and plenty of using it bad (for example wasting it) and the world goes on.
Still people point to Bitcoin... As I wrote in the previous post: it's incorrect and unfair.

(Of course guesstimating how much electricity will Bitcoin businesses consume in the future is also useless and bound to be incorrect.)

[stompix]

Both "Bitcoin consumes as much as whatever country" and "how about banks" are wrong. Bitcoin miners and also the banks are businesses that pay for the electricity they use and make profit. Some go out of business (on both "sides") and Bitcoin and fiat will still exist.

Yup!
Can a farm raise pigs (family business  ) consume 50 euros worth of electricity per kg of meat? Nope!
Can a shop that has monthly revenue of 1000 euros spend 1500 on electricity? Again no!
We're talking about two systems and comparing expenditures total without comparing revenue and thus usage, which is totally inaccurate.

Still people point to Bitcoin... As I wrote in the previous post: it's incorrect and unfair.

If something is unfair and you come back at it with an unfair argument then you're doing the same.

(Of course guesstimating how much electricity will Bitcoin businesses consume in the future is also useless and bound to be incorrect.)

If you manage to pinpoint the price I can give you a pretty sure estimate on what the consumption will be, there is nothing that special in it.

[taufik123]

Good summary OP.
What I'd like to add to this is that saying that Bitcoin uses energy should not be a negative point. There are finite and infinite energy sources. While oil is finite, energy produced from the sun is not and with enough solar panels the netwok can be supported indefinitely. As long as Bitcoin mining can finance the production of these panels, it's all fine.
People who use such arguments to attack Bitcoin are dumb.

The alternative energy used is indeed very useful and does not depend on non-renewable energy such as coal which is a common energy producer of electricity. The use of electrical energy produced by solar cells will certainly be more efficient and more environmentally friendly because solar energy will not run out and can be used forever. Several other alternative energies that can be used, such as wind power generation, hydropower (waterfalls or water with heavy currents) and several other alternative energies.

The consumption of bitcoin for electrical energy will have many solutions and do not look negatively about its excessive use, because electrical energy can be produced by natural resources that will never run out.

Excessive use of electrical energy is not only in the bitcoin mining process, there are many others that use higher electricity.

[hatshepsut93]

First myth: Energy

Electrical energy is a type energy (duh), there's nothing wrong to refer to it as just energy, especially since there's so many ways how electric energy can be produced - burning fossil fuels, hydroelectric dams, solar power, etc.

Myth Three: A Comparison of the Incomparable

You are trying to make Bitcoin look good in this comparison, but it's actually just like your title - they are not comparable. Something like Visa is deeply incorporated in the global economy and billions of people are relying on it, while Bitcoin has maybe 5-30 millions of users, most of whom don't even use it on a daily basis.

[NeuroticFish]

If something is unfair and you come back at it with an unfair argument then you're doing the same.

Touché
Maybe next time I'll use the pig farm as example 

(Of course guesstimating how much electricity will Bitcoin businesses consume in the future is also useless and bound to be incorrect.)

If you manage to pinpoint the price I can give you a pretty sure estimate on what the consumption will be, there is nothing that special in it.

Yep, just I hope that in the future other businesses will start to matter too, not only the mining. And maybe that'll add more "variation". Because in order to be (closer to) fair, all the Bitcoin businesses should be taken into consideration, not only mining, isn't it?

[bitcampaign]

This also needs to be a serious concern bitcoin really consumes a lot of energy and others, but I only learn and correct it if I'm wrong, if the small miners are reduced and there are only a few large miners, whether to make the Diff small then the energy used is not too big to mine, it's just a thought, but it's not really working and effective, just looking at the altcoins the miner left so the Diff becomes small so maybe mining is easier with smaller hashrate too

[pixie85]

This also needs to be a serious concern bitcoin really consumes a lot of energy and others, but I only learn and correct it if I'm wrong, if the small miners are reduced and there are only a few large miners, whether to make the Diff small then the energy used is not too big to mine, it's just a thought, but it's not really working and effective, just looking at the altcoins the miner left so the Diff becomes small so maybe mining is easier with smaller hashrate too

It's not a serious concern because electricity is unlimited. As long as there's demand there will be supply.

We know that electrical energy can be made from wind, solar, ocean tides, geothermy and even methane gas. All those resources are infinite and the only requirement for them to be used is rising demand. Rising demand means somebody will pay for those new production facilities to be constructed.

We could double our world power production but we don't do it because there's not enough demand.

[FACE 2 FACE]

In order not to become a victim of various horror stories about bitcoin and how much it is now gluttonous in terms of electricity, it is best to consider this problem from the other side. First you need to answer the question - what lies on the other side of the scale! If the advantages that bitcoin provides more than outweigh the costs of its existence, then it has the right to develop further.

[stompix]

We know that electrical energy can be made from wind, solar, ocean tides, geothermy and even methane gas. All those resources are infinite and the only requirement for them to be used is rising demand.Rising demand means somebody will pay for those new production facilities to be constructed.

Methane gas is not infinite and do you know what rising demand comes with? Higher prices! And once something in a chain costs more guess what will happen to the end product. Energy is free if you find a way to capture transport and store it for free, and as you can see that's not possible.
I can give you one hundred things that would have top priority with unlimited energy, one of them being drinking water. Dare to compare?

Yep, just I hope that in the future other businesses will start to matter too, not only the mining. And maybe that'll add more "variation". Because in order to be (closer to) fair, all the Bitcoin businesses should be taken into consideration, not only mining, isn't it?

Do you mean that when we're talking about bitcoin we should also add the 11 000 ATMs as we do with banks? And we should also the energy consumption of all the exchanges with their data centers and offices? And count the energy of all the nodes?
Come to the dark side, you infidel   

Anyhow, seems like the energy consumption has just dropped somewhere between 10-20% depending on gear efficiency, no more cheap hydro in Sichuan, no more cheap coal in Inner Mongolia, no way to enter Xinjiang...problem solved!

[zasad@]

Electricity production is the same business as any other production. Most of the world's electricity is generated by combusting minerals. Mining will eventually move to countries that can offer the cheapest electricity prices.

I have never taken these stupid comparisons of electricity costs for Bitcoin mining and electricity costs for servicing the VISA payment system seriously.

This is a business, and in business, profit is important, not the amount of resources spent.