Bitcoin Uses More Electricity Than Many Countries
Why Bitcoin uses more electricity?
It’s no secret that the Bitcoin network uses a high amount of energy to verify blockchain activity and complete transactions. It’s one of the cryptocurrency’s most criticized features amongst opponents of digital currency and environmentalists alike. While crypto enthusiasts maintain its carbon footprint isn’t as bad as other energy-intensive industries such as construction, finance, and healthcare, its energy use is something that shouldn’t be immediately dismissed due to its widely documented impact on climate change and global warming.
But does Bitcoin really use more electricity than several countries around the world?
The short answer is yes, though it depends on which country you’re comparing it to. A 2019 research article by environmental researchers Christian Stoll, Lena Klaaßen, and Ulrich Gallersdörfer stated that Bitcoin’s carbon footprint equates to an annual electricity consumption of 45.8 TWh and has an annual carbon emission range from 22.0 to 22.9 MtCO2, which is roughly between the same levels produced by Jordan and Sri Lanka.
In the last couple years, however, Bitcoin mining has become as popular as ever, fueled by the coin’s price skyrocketing, as well as the ongoing COVID-19 pandemic, which had led to many stuck indoors discovering the world of crypto trading and mining. As a result, there’s been a high increase in the estimated energy output of Bitcoin’s network. In fact, the University of Cambridge Bitcoin Electricity Consumption Index estimates the network has an annualized consumption of approximately 121.54 TWh at this time of writing, which is about 0.6% of the world’s total electricity production and more than the consumption of the entirety of Norway, Argentina, Malaysia, and Sweden.
So why is Bitcoin so energy-intensive?
It all has to do with the network’s Proof-of-Work (PoW) consensus mechanism, which is used to verify and validate new blocks of data and further advance the blockchain anytime a transaction is facilitated. Bitcoin miners participate in this decentralized network and compete against one another using high-powered computers which perform complex mathematical equations to find the randomized whole number (known as the Golden Nonce) that completes each cryptographic puzzle and validates a new block. Long story short, these processes require a lot of computing power.
The higher the miner’s computational power, the better the chances of them being the first to solve the block puzzle and receive a Bitcoin reward. As of November 2020, miners receive 6.25 bitcoins per validation, netting a hefty $301,861.42 in profit at this time of writing.
To learn more about how much energy Bitcoin actually consumes and why it requires so much energy, check out our more in-depth article on the topic.
How Does Bitcoin's Electricity Use Compare to Different Countries?
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