The global electricity consumption of Bitcoin mining is now greater than the total amount of electricity consumed in Argentina or the United Arab Emirates, and it is almost on a par with Norway. Those startling figures come from the Cambridge Centre for Alternative Finance at the University’s Judge Business School, which publishes a real-time updated index of Bitcoin electricity consumption worldwide (www.cbeci.org). They mean that if Bitcoin miners were a nation, it would now be in the top 30 consumers of electricity worldwide, though the currency was only founded in 2009.
The issue is important as it demonstrates that Bitcoin, cryptocurrencies, and distributed computing or ledger systems (such as blockchain) demand vast amounts of processing and energy, which has implications for the environment and for climate change.
According to CBECI, Bitcoin mining alone consumes an estimated median average of 121.36 TWh (Terawatts per Hour) of electricity every year. By comparison, United Arab Emirates consumes 113.2 TWh across all uses of electricity, Argentina 121 TWh, and Norway (at 29 in the global league of consumers) 122.2 TWh.
However, it is possible that Bitcoin mining uses a lot more energy than that: CBECI cites an upper estimate of 289.5 TWh – consumption that would be greater than Mexico’s entire annual electricity usage and approaching that of the world’s twelfth largest national consumer, the UK (300.5 TWh).
CBECI’s median estimate of 121.36 TWh already represents enough electricity to power all of the UK’s kettles for 27 years, says the organisation. While if the highest estimate is correct, then it would be equivalent to roughly half of the electricity generated worldwide from biofuels and waste recycling.
The statistics are based on a variety of data and energy calculations (see Methodology on the CBECI website). The upper estimate represents a worst-case scenario ie: the use of the least efficient mining rigs currently available) and the lower rate the best/most efficient case.
The median therefore represents what researchers believe is the reality: a mix of old and new hardware, but it stands to reason that many miners will be using old equipment to keep their hardware costs to a minimum.
But the research is not just about power in the sense of energy usage. It is also about political and financial power.
The map of Bitcoin
CBECI’s in-depth data exposes the geographic breakdown of the network (an inexact science, as IP addresses can be faked or cloaked). This reveals some important insights about where alternative finance power actually resides in the world.
It shows that Bitcoin mining is overwhelmingly based in Asia and Eastern Europe. Nearly two-thirds (65 percent) of it takes place in China (as a percentage of the global hash rate mapped against IP location). Roughly seven percent is in the US, just under seven percent in Russia, six percent in Kazakhstan, four percent in Malaysia, and nearly four percent in Iran.
This snapshot of Bitcoin’s footprint in the physical world shows that there are nine times more Bitcoin miners in China than in the US, and the vast majority of mining – at least 86 percent of it – takes place outside of Western economies.
Overall, CBECI’s data has other real-world implications. First, the notional value of any cryptocurrency is meaningless unless it includes the cost per watt of mining it via expensive, power-hungry GPU-based systems, FGPAs, and other rigs, such as the more energy-efficient ASICs.
All of this hardware is costly to manufacture and ship across the world, rapidly becomes obsolete, and so eventually ends up in landfills – as do other types of ICT hardware, of course. Mining rigs also generate a lot of heat, which demands cooling, so the environmental impact is significant in every respect.
However, the critical difference is that if the notional value of a Bitcoin – or any cryptocurrency – is low at a given…