Cambridge Bitcoin Electricity Consumption Index - The impact of BTC in the World

[RickDeckard]

According to the Cambridge Bitcoin Electricity Consumption Index (CBECI)[1], if we look at the total electricity consumption of the world - 20 863 TWh - BTC is responsible for 0.59 % of it. That's... quite something already.

The link that I've shared contains tons of useful and really interesting information regarding in what fuels the whole network(s) that sustain the activity behind BTC and I though it would be interesting to share here (and hopefully generate discussion). Currently BTC stands at rank 28, surpassing countries such as Norway, Finland, Belgium, Greece.... This is nothing new but the fact of having all this data gathered up in a visual way makes us wonder what the future may hold for BTC in regards to sustainability.

We can reference as well the recent purchase of BTC from Tesla which makes it seem like that Tesla isn't so worried about CO2 when talking about future assets and their liquidity. In fact, Franck Leroy (I know he's an ecologist, but his math makes sense)) even went to the detail of computing what could represent the actual possibility of buying a Tesla with BTC and the results are riveting - "buying a Tesla in Bitcoins cancels 4 times the CO2 savings for its whole lifetime"[2].

What do you guys think? Long term sustainability may be feasible (as long as technology can keep up with the increased difficulty of the network) or are we going to see BTC climb even faster the rank in the near future?

[1] https://cbeci.org/cbeci/comparisons
[2] https://medium.com/coinmonks/buying-a-tesla-in-bitcoins-cancels-4-times-the-co2-savings-for-its-whole-lifetime-c28b042e3b9a

[BurtW]

Bitcoin Network Power Consumption Estimate

First, note that Bitcoin mining efficiency does not matter when estimating the trend of the power consumption of the entire Bitcoin network.

The power consumption of the entire network depends on five things:
 
x = the exchange rate [USD/BTC]
e = the era [0..32]
f = the average fees per hour [BTC/hour]
c = the average cost of energy [USD/kWh]
r = the average percentage of income miners spend on energy [unit less ratio]

From the era we can calculate the average hourly BTC subsidy rate:
s = 6(50/2^e) [BTC/hour]

And the average amount of BTC all the miners in the world make per hour:
b = s + f [BTC/hour]

From this we can calculate the amount of USD per hour all the miners in the world make:
u = bx [USD/hour]

Given the worldwide average percentage of income miners spend on energy the amount spent worldwide on energy is:
ur [USD/hour]

And finally, the worldwide power consumption is given by:
P = ur/c [kW]
   = bxr/c [kW]
   = (s + f)xr/c [kW]
   = (6(50/2^e) + f)xr/c [kW]

Notice that mining efficiency does not enter into this equation and does not matter.

You do not need to know or estimate the average overall efficiency of the mining network unless you want to calculate the difficulty and/or hash rate.

Let’s put in some numbers:

x = $50,000; the exchange rate [USD/BTC]
e = 3; the era [0..32]
f = 5; the average fees per hour [BTC/hour]
c = $0.03; the average cost of energy [USD/kWh]
r = 0.8; the average percentage of income miners spend on energy [unit less ratio]

P = (6(50/2^e) + f)xr/c [kW]
   = (6(50/2³) + 5) 50000 ( 0.8 ) / 0.03 = 56,666,666 [kW] = 57 Gigawatts

World power production/consumption is about 15,000 Gigawatts.

Bitcoin mining will trend toward 57/15,000 = 0.38 % of world power production given these values.

This scales by BTC price so:

BTC at $500,000 means power consumption would trend to 3.8% of worldwide power.

BTC at $5,000,000 means power consumption would trend to 38% of worldwide power.

[ranochigo]

Not sure how the comparison makes sense at all. If anything you wouldn't take the energy used to mine that amount of Bitcoins but you would take the energy that is used to mine the block that the specific transaction is included in. The Bitcoins are mined regardless and the carbon footprint is distributed on those who happens to use those UTXOs so it makes little sense to count the energy used to mine it. Tesla is a tech company that ventures into EV but their primary concern is not to tackle climate change; else they would stop producing luxury cars and instead focus on vehicles which can accommodate much more people/sqft. Doesn't help that some countries are using non-renewable sources which would just exacerbate the problem as they're thinking it's good for the environment but it is not in actuality.

Not really that big of an issue. Bitcoin mining is most profitable if the miners are able to siphon off the excess energy that energy companies produces. It's no secret that most of them are situated near power plants which produces clean energy so the environmental impact is probably blown out of proportion.

[odolvlobo]

Your calculations are straightforward, but the usage is not proportional to the price of a bitcoin because the price of electricity is not inelastic. As the usage goes up, the cost of electricity will increase more quickly.

BTW, you can do exponents like this: 2^e

[Lorence.xD]

If the bitcoin sector is only responsible for a measly .59% of electricity consumption then there should be nothing to be worried about. I would say that the long-term feasibility of bitcoin's power consumption can't be clear but if we can manage to keep it at a certain price point as an equation was made by a user in this thread that concludes with bitcoin electricity consumption reaching a 3.8% if the price was around 500 thousand per bitcoin which is still not happening for a long time so I would lean more on the fact that it will be feasible.

The user who made the thread.

Bitcoin Network Power Consumption Estimate

[Vishnu.Reang]

0.6% is not a very large amount. Also, the proportion of renewable sources in electricity production is growing with every passing year. Why no one is talking about the environmental footprint of minting coins and printing banknotes? How much ecological damage is done by the mining of metals that are being used to mint coins? Also, how much forest is cut down every year, for printing banknotes? Once mined, Bitcoin is indestructible. On the other hand, banknotes and coins need to be replaced time to time.

[Ucy]

I think researchers should also be interested in what Bitcoin contribute to the world and compared it to how much energy it uses to know whether it's really worth it. The disadvantages should cause little to no problems to the environment... And the advantages should far outweigh the disadvantages in order to be considered less risky or fairly safe. Wish they can really provide strong proofs that the energy usage has lots consequences for the environment .
By the way, I hope Bitcoin becomes more energy efficient, environmentally friendly, useful and secure in the future.

[matjas]

0.6% is not a very large amount. Also, the proportion of renewable sources in electricity production is growing with every passing year. Why no one is talking about the environmental footprint of minting coins and printing banknotes? How much ecological damage is done by the mining of metals that are being used to mint coins? Also, how much forest is cut down every year, for printing banknotes? Once mined, Bitcoin is indestructible. On the other hand, banknotes and coins need to be replaced time to time.

Because this in now a new and popular way of explaining why bitcoin is bad. Before it was pyramid and not backed by anything, now they found this convenient information which every media will use against crypto, which we have to admit its very efficiant way of FUDing

[thecodebear]

All the FUD about bitcoin mining energy consumption is nonsense and written by people who don't understand bitcoin and just want to put it down.

Yes, Bitcoin uses lots of electricity. A lot of that comes from renewables. Also it is stupid to calculate the energy or CO2 cost of a bitcoin transaction because it isn't the transactions that take electricity, it is the blocks, no matter how many transactions are in that block. The power/CO2 cost doesn't scale with transactions so it's a pointless calculation. Also, the blockchain is the settlement layer, there are plenty of transactions done through 3rd party services, LN txs, and batched transactions that are all off chain and later settle on-chain. So even if you for some reason wanted to talk about electricity/CO2 used per tx, the numbers used are wildly inaccurate.

The Tesla thing is stupid for the reasons explained above, but also because Tesla is a company and the purpose of a company is to make money. Bitcoin will preserve (and grow) the value of Tesla's money on hand so it makes sense for them to invest in Bitcoin as a store of value. And people already have Bitcoin, allowing people to use Bitcoin to buy a Tesla doesn't add anything to Bitcoin's carbon footprint. People aren't going to stop mining Bitcoin if Tesla never allowed people to buy their cars with Bitcoin, so it's a moot point. But rather than understand the real situation with Bitcoin its easier just to do a simple calculation and try to act smart so that's what everyone does who has an anti-bitcoin agenda.

And of course these people never bother to weight their wildly inaccurate calculation of the cost of bitcoin with what bitcoin gives to the world. Nor do they bother to calculate the energy/CO2 costs of the banking sector or any other industry. Because these things would take actual research and thought.

[so98nn]

What do you guys think? Long term sustainability may be feasible (as long as technology can keep up with the increased difficulty of the network) or are we going to see BTC climb even faster the rank in the near future?

That is much much smaller picture than what we think I guess.

We are all discussing this within a limited dimension box right now because we are not thinking about future energy consumptions and resources.

What if we are able to harness the Sun's energy or Ocean's energy more than 100% all over the globe? What if we produce techniques that are cheaper than Solar panels or wind mills? This could just turn the above picture upside down.

If we get our hands on such renewable energy then we can end up in completely different line of work. At the time electricity will not be the sole factor to decide the price of BTC but the demand and the way that crypto tech is used in the future.

Well, free energy won't be that far considering the giant leaps that we are taking towards Mars, Moon, Edge of the Solar system and what not!!

[zanezane]

0.6% is not a very large amount. Also, the proportion of renewable sources in electricity production is growing with every passing year. Why no one is talking about the environmental footprint of minting coins and printing banknotes? How much ecological damage is done by the mining of metals that are being used to mint coins? Also, how much forest is cut down every year, for printing banknotes? Once mined, Bitcoin is indestructible. On the other hand, banknotes and coins need to be replaced time to time.

The reason that no one is talking about it is because they have no relevance to their agenda which is to point out how bitcoin consumes a lot of electricity to operate. And if they talk about it in the same realm as bitcoin then they would end up dwarfing the amount of electricity that bitcoin compared to the ones that they put together with it. Banknotes that are out of commission can be used to make fertilizers depending if the bank note is made up of cotton or if it is made with polymer then there isn't a need to replace, it's not bitcoin against the world after all, they just want it to look like that.

[Lucius]

It is an incredible obsession with the idea that Bitcoin consumes huge amounts of energy and thus destroys the environment, that melts glaciers, raises the level of the world's seas and creates ozone holes. It’s all absurd and completely ridiculous if we know that that same amount of energy is thrown into the wind only in the US on standby devices every year.

The online tool has ranked Bitcoin’s electricity consumption above Argentina (121 TWh), the Netherlands (108.8 TWh) and the United Arab Emirates (113.20 TWh) - and it is gradually creeping up on Norway (122.20 TWh).
The energy it uses could power all kettles used in the UK for 27 years, it said.
However, it also suggests the amount of electricity consumed every year by always-on but inactive home devices in the US alone could power the entire Bitcoin network for a year.

I don’t know how much total energy is thrown into the wind each year globally, but I believe Bitcoin hasn’t been consumed as much since it originated - so the impact of Bitcoin on the world in that sense is negligible - except for those who want to believe it.

[BurtW]

Your calculations are straightforward, but the usage is not proportional to the price of a bitcoin because the price of electricity is not inelastic. As the usage goes up, the cost of electricity will increase more quickly.

BTW, you can do exponents like this: 2^e

Agreed.  That is why I said "trend to" perhaps "try to use" that much power would be better since, as you point out, prices would adjust.

Thanks.  Fixed the typos in all my exponents.

[dkbit98]

Franck Leroy dedicated his life to trash talk Bitcoin (and Gold mining), and he is talking about Tesla without researching that they produce more CO2 with process of creating their batteries than Bitcoin could ever do.
Everything is not black and white like it appears and Franck spent a lot CO2 writing all his posts and tweaking all the data to fit his narrative.
I mean just look at his Twitter, Mastodon and Medium pages and you will see that he magically appeared in February with his theories and fairytales...

The plan of the libertarians is to destroy the corrupt state in order to let the corruptors rule the world freely.

https://mastodon.online/@FranckLeroy
https://twitter.com/franckleroy_

[stompix]

Your calculations are straightforward, but the usage is not proportional to the price of a bitcoin because the price of electricity is not inelastic. As the usage goes up, the cost of electricity will increase more quickly.

Let's hope it will not grow at a rate that will impact prices as you will see a lot of negative reactions and even restrictions like the ones happening in a few places but on a far larger scale, I don't know how legit the news about Inner Mongolia is but if this keeps going on like this we will soon see them replicating quite soon as basically one location cutting electricity for miners means the load will shift to others

0.6% is not a very large amount. Also, the proportion of renewable sources in electricity production is growing with every passing year. Why no one is talking about the environmental footprint of minting coins and printing banknotes? How much ecological damage is done by the mining of metals that are being used to mint coins? Also, how much forest is cut down every year, for printing banknotes? Once mined, Bitcoin is indestructible. On the other hand, banknotes and coins need to be replaced time to time.

This KGB-style whataboutism propaganda is just as bad, What about that, what about that what about..
Ok, let's take banknotes
How many people in the world used bitcoin today? Half a million? How many people used banknotes? 5 billion?
How many people used BTC to buy food today? How many used cash?
I don't know why people are immediately getting triggered and rush to compare it to something else and their only defense is to point fingers: "Look, this is worse!"

Anyhow, the halving will take care of some of this, the revenue will drop by 75% in 7 years so even if the price will hit 200k will be at the same levels as now, the rest will probably be solved if we stop with all those renewables that only work with subsidies and go full nuclear, constant power no matter what time of the year and of the day.

[Nhazwrath]

This is a attempt to generate a (bad guy) of sorts.  Media models Require a bad guy for a story.  Truth is optional.  Welcome to modern media.    It should be ignored for the trash it is.

[Lucius]

I don't know why people are immediately getting triggered and rush to compare it to something else and their only defense is to point fingers: "Look, this is worse!"

Since you're probably partly referring to my post, I can only say that it would be stupid not to say anything and let talk about how Bitcoin will destroy the planet, take root and become something that will soon be seen as one of the main reasons "why don't use Bitcoin".

Many beginners are just reading this part of the forum and taking things for granted, and they should know how small the impact of BTC on the world really is - and how will you illustrate it to them if you don't give a concrete example? I personally mind when some push us into the category of criminals who use BTC to deal with illegal things, among other things - and I certainly don't want anyone to push us into the category of those who contribute to global warming and all that comes with it.

[stompix]

Since you're probably partly referring to my post,

No, I was strictly referring to the comparison with other things that do the same stuff, you can't go out and say well bitcoin does 0.00..1%, and agriculture burns one hundred times more, let's see long people last without bitcoin and how much without refrigerators! Bitcoin it's an economic environment of its own if it generates activity it will come with everything others have good and bad, you have to defend it but also keep being rational.

I certainly don't want anyone to push us into the category of those who contribute to global warming and all that comes with it.

Like it or not we are contributing to it, you're contributing to global warming with every action, bitcoin consumes energy, cars consume energy, heating your house does so and so is every single human activity on this planet. Bitcoin has a part of it and others have more, but you can't say that it's something eco-friendly either, as there is no such action, even planting a tree isn't if you're burning more gas to get them there and plant them than all the carbon they will grab from the atmosphere during their lifetime.

It is what it is and let's deal with it, this ain't a religion, this is economy.
Going to extremes will not help our cause either as people will just see us as a bunch of cultists.

[BurtW]

Anyhow, the halving will take care of some of this, the revenue will drop by 75% in 7 years so even if the price will hit 200k will be at the same levels as now, the rest will probably be solved if we stop with all those renewables that only work with subsidies and go full nuclear, constant power no matter what time of the year and of the day.

The next halving may have less impact than you think.

Currently the miners are getting about 5 BTC/hour from fees and 6(50/2³) = 37.5 BTC/hour from the subsidy.

Assuming steady growth in transaction demand until the next halving this could easily grow to 10 BTC/hour in fees.

So at the next halving we could have 10 BTC/hour in fees and 6(50/2⁴) = 18.75 BTC/hour from the subsidy, all at a higher price.

We will have to see how it all plays out...

[Lauren Smith]

How much research have you actually done? I was studying this very topic two days ago.
The global banking system uses 4x more electricity than bitcoin does and is nowhere near as safe.
Though I do agree they both use a lot of electricity.
The problem is how the electricity is made and not so much about how much is needed.

Bitcoin - 32.56 TWh Global baning system - 140TWh

https://medium.com/@zodhyatech/which-consumes-more-power-banks-or-bitcoins-8302750fe2bc