The University of Cambridge has developed an online tool in which you can consult in real-time an estimate of annual energy consumption at a global level that involves bitcoin mining.
According to that tool, bitcoin now consumes 64.15 TWh per year, a figure higher than that of countries like Switzerland. The debate about its validity is reopened, and it certainly does not seem that it can become a means of payment in the short term due precisely to the high energy cost of each transaction.
A brutal consumption (or maybe not so much)
The so-called Cambridge Bitcoin Electricity Consumption Index or CBECI tries to estimate the amount of energy needed for all bitcoin infrastructure to continue to function (mining included).
The calculation arrives on time, both for the bitcoin boom in recent weeks and for news like the one that appeared recently: energy consumption in Iran has skyrocketed 7% due to bitcoin mining. The country subsidizes electricity consumption to its citizens, which makes the electricity bill there – as in other countries – especially attractive to those who carry out this activity.
The index is actually a very open estimate: although it gives that figure of 64.15 TW per year, it also establishes a minimum figure (22 TWh) and a maximum (150 TWh) that show how difficult it is to make an accurate approximation to consumption real imposed by this cryptocurrency.
In fact, and as our colleagues in Magnet point out, the estimation of this consumption is very difficult to do: each miner or group of miners uses hardware of various types and, above all, diverse sources of energy, among which are renewables.
There are no known quotas from each source in this regard, so it is very difficult to adjust the accuracy. Already in the past Digiconomist raised its own criteria when estimating that consumption, which is established at 70 TWh per year.
Already then we warned that this figure is huge but you have to put it in perspective: the consumption of all iPads that exist in the market, for example, could rise according to the study of Electric Power Research to 1.53 TWh a year, a figure clearly inferior to that of bitcoin but that allows to establish a good reference.
Environmental problems, problems to turn it into the payment method
The interest in bitcoin as a reserve of value and as an excuse to speculate is obvious: the market has been watching for years how the value of bitcoin passes through a real roller coaster. That generates interest, and interest flows into that fever for mining that intensifies and reduces according to the value of bitcoin.
That has a direct effect on the energy consumption of bitcoin globally, but as we pointed out in February 2018, the consequence of this consumption is the environmental impact.
We have already commented that it is impossible to know what percentage of mining is done using renewable sources, but in a previous Magnet, the article cited studies that suggest that bitcoin would be responsible for 0.17% of global emissions. It is not a low figure, but it is not huge either. Or it can be, but always depending on the perspective, as we saw with the global consumption of the iPad.
Another potential environmental problem is added: bitcoin has a hard time becoming a payment method because transactions are very expensive. How much? The Digiconomist study of August 2018 made it clear: a transaction with bitcoin consumes as much energy as 100,000 transactions with VISA.
There are other better-known barriers to that hypothetical use of bitcoin as the currency of exchange – the number of transactions per second, above all – but what is evident is that this consumption is a clear impediment to get bitcoin to become something more than what is now. That does not seem to matter too much, because the interest in bitcoin (both its fans and its detractors) does not stop growing.