Christopher Bendiksen and Samuel Gibbons from Coinshares Research released an analysis of the Bitcoin mining network on 21 May 2018 and found that Bitcoin mining consumes 35 TWh annually, 0.14% of global capacity and less than the energy consumption the tiny European nation of Luxembourg. This is less than half of the 71 TWh estimated by Digicononomist, which would be 0.32% of global consumption and comparable to the large South American nation of Chile.
The Coinshares study estimates the spectrum of rig types being used across the Bitcoin mining network in order to make its calculation. Quite the opposite, Digiconomist uses the Bitcoin Energy Consumption Index (BCEI) which is based on the philosophy that it is too difficult to calculate energy consumption based on hash rate because of all the different types of mining rigs and their varying efficiency. BCEI simply assumes that Bitcoin mining electricity costs are 60% of Bitcoin mining revenue, and calculates electricity consumption from the resulting figure by using a global average of 0.05 USD per KWh.
Furthermore, the Coinshares study finds that the Bitcoin mining network is primarily fueled by renewable energy, especially hydroelectric, massively reducing its carbon footprint. Apparently, Bitcoin miners do a good job of setting up farms where there is an excess of renewable energy being generated, like in parts of China and Quebec, Canada.
This would make the estimates on Digiconomist of carbon footprint far overestimated. Currently, they say each Bitcoin transaction releases 500 kg of CO2 into the atmosphere, but if Coinshares is right then the amount of CO2 released per Bitcoin transaction is less than half this estimation.
On 16 May 2018, Alex de Vries published a study on Bitcoin mining energy consumption in ScienceDirect that used the BCEI, and his study made rounds through cryptocurrency media causing much discussion on how Bitcoin mining is bad for the environment due to the burning of fossil fuels, and would soon lead to increased electricity costs globally.
Apparently the BCEI calculation used by Digiconomist and Alex de Vries is overly simplistic and makes no attempt to calculate Bitcoin mining energy consumption by summing up the power consumption of the mining equipment that comprises the Bitcoin network, which is what the Coinshares study does.
It can’t be known for sure which methodology is right or wrong, what can be known for sure is that experts disagree on the amount of Bitcoin mining energy consumption and it may be far less than what the media has been reporting previously.
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