Electricity consumption doubled in the last six months with the trajectory likely to continue, says PwC economist
The global Bitcoin network currently consumes at least 2.55GW of electricity, a figure that has roughly doubled in the last six months, as new research suggests power demand could triple by the end of 2018.
The study was conducted by Alex de Vries, a Dutch economist working for PwC. Titled Bitcoin’s growing energy problem his paper is published in the energy journal Joule.
The Bitcoin blockchain uses an algorithm known as Proof of Work (PoW) to achieve its security and distributed consensus. So-called miners are paid in Bitcoin as they verify the agreed state of the ledger. It is this process that gobbles up the lion’s share of the energy required to keep the cryptocurrency functioning.
De Vries acknowledges the difficulty in estimating the true energy consumption of the Bitcoin blockchain owing to uncertainty about the relative contributions of CPU work, cooling, and other uses of electricity, as well as secrecy around Bitcoin mining operations. As a result, hard numbers are difficult to come by.
The lowest estimate for current energy usage is based on the assumption the 10,000 nodes in the Bitcoin network are all single, highly efficient, purpose-built machines such as the Antminer S9. In this case, the total electricity consumed would be around 2.55 gigawatts – or a little less than that used by Ireland.
However, most miners are likely to be considerably less efficient so 2.55GW of demand should be considered a lowest-case scenario.
Predicting future energy use is even more difficult since it will depend on loosely correllated factors such as the price of Bitcoin, efficiency improvements to the application-specific integrated circuits (ASICs), electricity prices, the number of new miners, local restrictions and many other issues.
De Vries’ economic model matches the marginal costs of Bitcoin mining – electricity consumed by PoW and cooling as well as equipment purchase and depreciation – with Bitcoin earned, reasoning that most miners will not run at a loss. He arrives at a “ballpark figure” of 7.67GW, a little less than demand from the whole country of Austria. This level of demand is likely to be reached within a year, and possibly even as soon as the end of 2018, de Vries says.
SUch a scenario would mean Bitcoin accounted for 0.5 per cent of global electricity usage. If this rate of increase (doubling or more every six months) continues, as seems likely, Bitcoin’s energy consumption could quickly become completely unsustainable. Bitcoin’s closest crypto rival, Ethereum, is showing a similar rate of increase according to Digiconomist (a cryptocurrency analysis site founded by de Vries), but currently consumes about a third as much power as Bitcoin.
The enormous energy consumption of Bitcoin – the first blockchain-based cryptocurrency – and associated environmental footprint, has led to some other currencies and decentralised networks looking away from the energy-intensive PoW process and towards alternative distributed consensus models such as Proof of Stake (something Ethereum’s developers have said they are working towards), Delegated Proof of Stake (EOS), Proof of Capacity (Burst) or Proof of Resource (MaidSafe).
Meanwhile, cryptocurrency miners are travelling the globe in search of cheap and lower carbon electricity. Iceland has become a popular location because of its low cost, low carbon geothermal resources, but already miners are using more than the country’s citizens. Last year miners were chartering 747s to fly in the latest ASICs and graphics processing units (GPUs) to stay ahead of the competition, which would have rather undermined any environmental savings.
A version of this article first appeared at Computing.co.uk