Bitcoin Mining Now Consuming More Electricity Than 159 Countries Including Ireland & Most Countries In Africa
Bitcoin’s ongoing meteoric price rise has received the bulk of recent press attention with a lot of discussion around whether or not it’s a bubble waiting to burst.
However, most the coverage has missed out one of the more interesting and unintended consequences of this price increase. That is the surge in global electricity consumption used to “mine” more Bitcoins.
According to Digiconomist’s Bitcoin Energy Consumption Index, as of Monday November 20th, 2017 Bitcoin’s current estimated annual electricity consumption stands at 29.05TWh.
That’s the equivalent of 0.13% of total global electricity consumption. While that may not sound like a lot, it means Bitcoin mining is now using more electricity than 159 individual countries (as you can see from the map above). More than Ireland or Nigeria.
If Bitcoin miners were a country they’d rank 61st in the world in terms of electricity consumption.
Here are a few other interesting facts about Bitcoin mining and electricity consumption:
In the past month alone, Bitcoin mining electricity consumption is estimated to have increased by 29.98%
If it keeps increasing at this rate, Bitcoin mining will consume all the world’s electricity by February 2020.
Estimated annualised global mining revenues: $7.2 billion USD (£5.4 billion)
Estimated global mining costs: $1.5 billion USD (£1.1 billion)
Number of Americans who could be powered by bitcoin mining: 2.4 million (more than the population of Houston)
Number of Britons who could be powered by bitcoin mining: 6.1 million (more than the population of Birmingham, Leeds, Sheffield, Manchester, Bradford, Liverpool, Bristol, Croydon, Coventry, Leicester & Nottingham combined) Or Scotland, Wales or Northern Ireland.
Bitcoin Mining consumes more electricity than 12 US states (Alaska, Hawaii, Idaho, Maine, Montana, New Hampshire, New Mexico, North Dakota, Rhode Island, South Dakota, Vermont and Wyoming)
Growth of Bitcoin Mining Electricity Consumption
While Bitcoin Mining is only currently consuming 0.13% of the world’s electricity output, it’s growing incredibly quickly.
The Bitcoin Energy Consumption Index estimates consumption has increased by 29.98% over the past month. If that growth rate were to continue, and countries did not add any new power generating capacity, Bitcoin mining would:
Be greater than UK electricity consumption by October 2018 (309 TWh)
Be greater than US electricity consumption by July 2019 (3,913 TWh)
Consume all the world’s electricity by February 2020. (21,776 TWh)
The Cost of Mining Bitcoins
The Bitcoin Energy Consumption Index estimates that the total annual cost of mining Bitcoins stands at $1.5 billion (£1.1 billion).
However, that assumes Bitcoin mining is occurring in places with cheap electricity (not an unreasonable assumption).
The US average retail price per kilowatthour is 10.41 cents, which means using 28.05 TWh would cost: $3.02 billion (£2.28 billion).
In the UK it would even more expensive, assuming you paid the rock bottom price of 10.10 pence per kilowatthour (Bulb’s prices for London homes) it would still cost £2.93 billion ($3.89 billion).
Interestingly, Bitcoin’s price increase over the last month has been just over 40%, which is greater than the increase in electricity consumption.
This means the estimated annualised global mining revenues now stand at $7.2 billion USD (£5.4 billion), which even at the more expensive estimates listed above, means it’s still very profitable.
How Does Bitcoin Mining Consume Electricity?
At a very basic level Bitcoin mining requires expensive and power hungry computer hardware. As the the IEEE explains:
Mining power is high and getting higher, thanks to a computational arms race. Recall that the required number of zeros at the beginning of a hash is tweaked biweekly to adjust the difficulty of creating a block—and more zeros means more difficulty.
The Bitcoin algorithm adds these zeros in order to keep the rate at which blocks are added constant, at one new block every 10 minutes. The idea is to compensate for the mining hardware becoming more and more powerful.
When the hashing is harder, it takes more computations to create a block and thus more effort to earn new bitcoins, which are then added to circulation.