Nobody Knows How Much Energy Bitcoin Is Using (vice.com)

dmoberhaus writes: A new report published in 'Joule' today claims Bitcoin may use up to 0.5% of the world's energy by the end of this year. We often hear about how bad Bitcoin is for the environment -- it already uses the same amount of energy as the country of Ireland -- but these numbers are usually just the /minimum/ amount of energy the network must be using. The actual amount of energy used by the Bitcoin network is likely substantially higher, but getting an accurate reading on that energy level is hard. The only researcher trying to quantify Bitcoin's energy use spoke to Motherboard about opening Bitcoin's 'black box.'

Comments

More importantly

[bobstreo]

how much bandwidth does it consume?

You can always toss some solar panels and a powerbank into your cabin in the woods to mine.

I know there are concerted efforts to thermal map grow sites, and bitcoin miners are starting to be of interest.

The power company knows how much electricity you're using, and they can figure out from your billing information if you're doing something "extra"

Re:More importantly

[NicknameUnavailable]

There are entire multi-megawatt coal fired plants that are privately owned running Bitcoin mining rigs in multiple countries right now.

Re:But how much energy is used by traditional fiat

[Anonymous Coward]

You raise an interesting point about current money using a lot of energy and resources to maintain; however, I'd be shocked if it were 0.5% of all energy produced (as bitcoin is being quoted as using). I've no doubt bitcoin uses more. A lot more.

Also, bitcoin is used by what, about 1 million people world wide? Whereas cash is used by... 6 or 7 BILLION people.

1 million- using 0.5% of all energy (and only a small fraction of that 1 million are miners using it), is a disproportionate amount of energy. Imagine if the other 7 billion of us started using bitcoin too. The energy usage would go up.

Re:But how much energy is used by traditional fiat

[Spy Handler]

It's not an apples to apples comparison, because bitcoin is not needed in this world or any other world, whereas normal currency is.

Suppose a new fad appears where people are burning big piles of coal stacked in the shape of a giant penis. Say it becomes really popular. Critics then point out that it's a waste of energy and emitter of greenhouse gases. Defenders of penis coal justify this by saying,

"But the CO2 emissions from cars is much bigger than CO2 emission from penis coal. So it's not a problem, cars pollute more than penis coal."

Re:But how much energy is used by traditional fiat

[Actually, I do RTFA]

It costs a lot of money to maintain paper bills and coins.

A printing press does not use a lot of energy. Hell, even smelting metal for coins doesn't use anywhere near that much energy.

Visa averaged 6kJ each for 111.2 billion transactions in 2017. Compare that to Bitcoin, which at most favorable estimates (only 0.3% of world energy), averaged 3GJ each transaction. That's 500,000 times as expensive. VISA uses less than 0.3% of Bitcoin's nominal usage, and probably 0.1% of Bitcoin's total usage. Yet it processes many orders of magnitude more transactions.

Re:What about energy consumption of other currency

[jythie]

The major difference is that with all those other examples there is no arms race for power usage. The more energy you sink into mining the bigger the payoff you get, and the system can support essentially an infinite amount of energy input. So energy usage will always scale up to match energy cost, while in those other domains energy usage is a cost that only drives down profit.

Re:But how much energy is used by traditional fiat

[Waffle Iron]

$1B out of the global GDP OF $84 trillion is only .0011% of overall economic activity. Assuming that energy consumption of most economic activities is roughly proportional to cost, you've only accounted for 1/420th of Bitcoin's energy use.

And don't forget that the US dollar is used for orders of magnitude more total transaction value than Bitcoin. Even if you add in the energy use of the portion of the global banking industry that deals specifically with fiat currencies, here is simply no way that they use anywhere near the amount of energy per unit of value transacted as Bitcoin does.

Re:But how much energy is used by traditional fiat

[Solandri]

Traditional currency has a financial incentive to reduce transaction costs. If the transaction costs are too high, people will simply stop using the currency. They will instead use a different currency or resort to bartering to reduce their costs. Over the centuries, this has driven the per-transaction cost down to cents or fractions of a cent.

• A dollar bill costs about 5 cents to make. and will last a bit more than 5 years (older bills would last less than 2 years). Higher denominations are about 10 cents to make (more anti-counterfeiting measures). If you average them across all denominations, it works out to about 1.5 cents per $1. So the cost of producing the bill amortized per transaction is on the order of hundredths or thousandths of a cent.
• A store owner carrying a bag of the store's receipts for the day to the bank, if he's carrying say $1000 in revenue to a bank 2.5 miles away, that's 5 miles at a IRS-estimated vehicle cost rate of 55 cents/mile, or $2.75 for the round trip. And the cost to carry the bag to the bank is then 0.275 cents per dollar. If that revenue is from 50 transactions ($20 per transaction), that works out to a cost of 5.5 cents per transaction. (I'm deliberately erring on the high side to favor bitcoin. Most businesses I know choose a bank which is much closer. And $1000 revenue per day is about as low as a small business gets.)

How does bitcoin compare?

• Production energy costs are very close to the value of the bitcoin generated. So call it 80 cents per dollar. Nearly two orders of magnitude higher than paper currency.
• Bitcoin deliberately imposes a high energy cost in each transaction. So high that many online stores have stopped accepting bitcoin because the costs have reached several dollars per transaction.

Basically, bitcoin's problem is that it replaced gold's natural scarcity with artificial scarcity produced by imposing a high energy cost to generation and transaction. Consequently, its production and transaction costs are roughly two orders of magnitude higher than traditional currencies. Mathematically, it (blockchain) is a brilliant concept. But it's obvious its developers had little practical knowledge of both monetary economics and day-to-day business economics.

Those in Cash houses, shouldn't throw stones.

[geekmux]

Should we talk about how much energy is wasted building and maintaining heavily fortified bank buildings that warehouse large stacks of colorful paper? Or why the US is still minting fucking pennies?

When comparing standard currency to cryptocurrency, traditional proprietors of legal tender have zero room to talk about overhead or waste. At least bitcoin doesn't have to exist as physical tender, and we've done fucking nothing to minimize or eliminate the massive burden of printing and minting cash, regardless of the popularity of electronic transactions. The US Mint spends billions every year just in metals and materials costs.