Cryptocurrencies like Bitcoin are known to consume notoriously excessive amount of electricity. In fact, it is rumored that Bitcoin mining uses more energy than most countries. Well, the rumor is true! If Bitcoin is listed in terms of energy consumption, it ranks as 47th largest energy consumer in the world.
Tim Swanson, the founder of PostOakLabs, a US-based technology advisory firm took the task of figuring out how much electricity does Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and Monero consume. He noted the aforementioned energy consumption of Bitcoin on his official Twitter account:
for perspective, ~50.5 billion kWh / year would place the Bitcoin network at around the 47th largest on the list of countries by electricity consumption, right between Algeria and Greece:https://t.co/07tLoF8grc
— Tim Swanson (@ofnumbers) August 24, 2018
No single stat will show you an accurate energy consumption of the Bitcoin network as nobody tracks the real-time energy consumption of mining of Bitcoins. To calculate this figure, Swanson looked at the hashrate of the bitcoin network i.e. around 50,000,000 terahashes, equivalent of 3,846,000 S9s, or over 3 million S9s.
Swanson notes that every miner might not use the S9. Since it is the most common miner available currently, it provides a good approximation for the power consumption on the bitcoin network. Whether the other miners are more or less efficient their power consumption is comparable to the S9.
Given that the vast majority of miners are left running 24 hours a day, 7 days a week, Swanson did the math as follows:
Upon checking the list of energy consumption by countries, Bitcoin stands among the top 50.
Swanson admits that this is a lower boundary as it doesn’t include other mining costs. Miners need to take care much more than electricity, such as cooling costs. Due to subsidies, a mining farm might receive, some older miners are also highly inefficient and consume more electricity.
Also Read:-
On considering all these costs, bitcoin’s energy consumption rises significantly. Notably, earlier this month a study from researchers at PWC suggested that bitcoin mining activity uses more energy than Austria. Austria generates $415 billion per year in economic activity, whereas Bitcoin, processed about $70 million in payments in the month of June.
Swanson thoughts on the matter are:
you don't have to be a hippy tree hugger (i'm not) to clearly see that an proof-of-work blockchains (such as Bitcoin and its derivatives) are currently consuming significantly more resources than they create.
yet this math is hand-waved away on a regular basis by coin lobbyists.
— Tim Swanson (@ofnumbers) August 24, 2018
While Swanson expanded his Twitter thread in a blog post on his official website, OfNumbers.com, he noted the electricity consumption of bitcoin, Bitcoin Cash, Ethereum, Litecoin, and Monero. These coins represent some of the most popular Proof-of-Work (PoW) coins in the world. Is proof of work fundamentally flawed? Let’s look at Swanson’s analysis.
Bitcoin Cash consumes similar energy to the bitcoin network. Mostly the same equipments are used to mine BTC and BCH as both networks use the same SHA256 proof of work hash function.
Past month, BCH’s network hashrate hovered around 4 to 4.5 exahashes. On performing a similar calculation that was done for Bitcoin network – Again, these machines are also left on 24/7 and consume about 36 kWh per machine per day.
Bitcoin Cash ranks at 124th on the list of energy-consuming countries between Moldova and Cambodia. The real question is does Bitcoin Cash justify this cost. In the past year, Bitcoin Cash has processed between $4 million and $10 million of merchant payments each month, while Cambodia’s annual GDP is $22 billion and Moldova’s annual GDP is $8 billion.
Swanson applied a similar calculation for the Ethereum network. At the time of this writing, ASIC’s have taken popularity, but GPUs are mostly employed for Ethereum mining.
There are an estimated 10 million GPUs churning up hashes for the Ethereum network. Assuming every miner is using the most efficient Ethereum miner, the Innosilicon A10 (scheduled to be released next month).
Ethereum ranks 100th on the list of electricity consuming nations between Guatemala and Estonia. Guatemala’s GDP is $72 billion per and Estonia’s GDP is $26 billion. Whereas, calculating economic benefit of Ethereum is hard as it was designed to be a global supercomputer and not a global payment platform.
In saying that, Swanson believes that it highly “unlikely that the Ethereum network is generating economic activity equivalent to either Guatemala or Estonia.”
Also Read:-
Built on the original bitcoin codebase, Litecoin mining is mostly done with the L3+ or L3. Upon assuming that miners use L3+ to mine Litecoin, the calculation derived is:
LTC’s energy consumption is roughly the same as BCH, ranked at 124th on the list of energy-consuming countries between Moldova and Cambodia. While Litecoin does have daily transaction volume, the probability of it providing benefits similar to Cambodia and Moldova GDP is unlikely.
Also Read:- How to Mine Litecoin
Similar to Ethereum mining, Monero mining is dominated largely by GPUs. Earlier this year Monero introduced an ASIC-resistant change, preventing large-scale miners from dominating the network like we’ve seen with BTC and BCH. It is possible to mine Monero by CPU.
Infact, Monero (XMR) is one of the best cryptocurrencies for CPU Mining!
According to Swanson’s calculation the hashrate of the XMR network is around 475 MH/s. A single Vega 64 generates about 2,000 hashes per second.
Monero’s stand between Haiti and Seychelles in terms of annual energy consumption. $8.4 billion in GDP is generated by Haiti per year and Seychelles has a GDP of $1.5 billion. On the other hand, Monero’s transaction volume has remained flat over the past year, and the economic impact of Monero is far less than either country.
Also Read:- List Of Cryptocurrencies For CPU Mining | Best CPU Mining Coins
Swanson comparison of the “efficiency” of PoW networks in terms of creating value, concluded that countries are getting far better “value” from their energy consumption than PoW networks like BTC, BCH, ETH, LTC, and XMR.
As illustrated, the digital tokens take an extraordinary amount of electricity for mining and generate significantly less value than comparable countries. For instance, Bitcoin energy consumption is equivalent to Austria. Austria’s GDP is $386.4 billion USD per year, whereas Bitcoin processes about $840 million per year ($70 million of transactions per month). The latter is miles away from Austria.
You can read the full analysis by Tim Swanson here.
Keep in mind that we may receive commissions when you click our links and make purchases. However, this does not impact our reviews and comparisons. We try our best to keep things fair and balanced, in order to help you make the best choice for you.
