Which one uses the most power?

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The large amount of energy used by cryptocurrencies has long been a point of contention between enthusiasts and critics. It’s no secret that blockchain activity, from mining coins to completing transactions, is far from environmentally friendly. Some cryptos now use more electricity than entire cities or even countries.

The two biggest players in the crypto game, Bitcoin and Ethereum, are both guilty of this. But what takes the most energy, and is either of them doing something to improve?

Bitcoin’s energy needs

Bitcoin (BTC) has been the subject of much criticism for its gigantic energy needs. Crypto, by nature, is not an environmentally friendly industry. The sheer popularity of Bitcoin has given way to increasing power needs from many different parties. Before we get to Bitcoin’s real energy problem, let’s start with one of its simplest functions: buying and selling.

In October 2021, the statistics site Statista conducted a study on the amount of electricity used by a Bitcoin transaction. They compared it to Visa, another popular digital payment method. The results were quite shocking and very disturbing.

The study found that a single Bitcoin transaction uses about 12 times more electricity than 100,000 Visa transactions. About 400,000 Bitcoin transactions take place every day, so every 24 hours the transactions alone use 7,000 MWh of electricity.

Related: The Top Reasons Bitcoin’s Taproot Upgrade Is Game-Changing For Crypto

To put this in perspective, consider the power consumption of an electric car. A standard electric car consumes around 0.20 kWh per kilometer. So an electric car would have to travel 35 million kilometers (22 million miles) to use as much electricity as all daily Bitcoin transactions. Yes, you read that right. But it doesn’t stop with transactions. The simple act of finding Bitcoins and putting them into circulation is also quite a large electricity bill.

MAKEUSEOF VIDEO OF THE DAY The energy needs of Bitcoin mining

Mining is the process of finding and circulating new crypto coins. You’ve probably heard of it if you’re into crypto, or maybe you’ve seen it in the headlines. Mining requires incredible amounts of energy and contributes to climate change.

Let’s take a look at the data here. Currently, users mine around 144 Bitcoin blocks daily, which is just over 50,000 a year.

This extraction process consumes up to 91 TWh of electricity each year. It may seem like a small amount, but a terawatt hour contains a million megawatt hours. So in short, Bitcoin mining uses a lot more energy than the total annual transactions made. It is without a doubt the most energy intensive part of the cryptocurrency industry.

Let’s take a look at another study from Statista to better understand Bitcoin’s energy consumption as a whole.

The graph above shows that Bitcoin now uses 177.43 TWh of electricity on an annual basis. Mining takes up about half of that, with storage, transactions and other items making up the rest. So, Bitcoin clearly consumes a huge amount of energy, but how does it compare to Ethereum, the second most popular cryptocurrency in the world?

Ethereum’s energy needs

Ethereum (ETH) is an extremely popular cryptocurrency, with a current market cap of almost $ 530 billion. Its popularity and value have skyrocketed, but increased demand means increased energy needs. So, let’s take a look at Ethereum transactions first.

Statista data shows that, like Bitcoin, an Ethereum transaction uses more energy than 100,000 Visa transactions. It’s still a shocking fact, but the energy difference between the two is not as drastic as what we see with Bitcoin. Ethereum uses 1.2 times the energy required for 100,000 Visa transactions. But remember, Bitcoin requires over 12 times more energy for a single transaction. So there is a drastic difference in the power consumption here.

But that doesn’t solve cryptocurrency’s central environmental problem: mining. So let’s see how Ethereum compares to Bitcoin in this case.

The energy needs of Ethereum mining

Currently, Ethereum mining consumes around 44.5 TWh of energy each year, which is barely half that of Bitcoin. Of course, this is still a huge amount of energy. But when examining these numbers, it’s important to consider how much BTC and ETH has been mined so far.

There are currently just under 19 million BTC and almost 120 million ETH in circulation. So about six times as much Ethereum as Bitcoin was mined, while using much less electricity.

Related: The Best Places to Invest Ethereum

Now back to the original question: which crypto uses the most power, Bitcoin or Ethereum? When looking at the numbers, the very obvious answer is Bitcoin from afar. Its transactions and mining process use significantly more electricity than Ethereum. Statista’s reports on the total amount of energy used by the two cryptos confirm this.

As previously stated, Bitcoin currently uses around 177.43 TWh of electricity per year. Ethereum uses around 79.69 TWh per year. Again, we see that Bitcoin’s energy needs exceed those of Ethereum. So, in short, Bitcoin is definitely the most energy intensive cryptocurrency.

Additionally, Ethereum has now updated its blockchain so that it uses even less power. This new blockchain is ETH 2.0.

What is Ethereum 2.0?

The upgrade to ETH 2.0, also known as “Serenity”, aims to provide a more efficient and environmentally friendly blockchain. This upgrade resulted in several differences. One of them is Ethereum’s transition from the proof of work mechanism to the proof of stake mechanism. These are essentially consensus protocols that ensure the security of blockchains.

There are a few differences between these two mechanisms, but the difference in energy efficiency is what really matters. The Proof of Stake Mechanism is considerably more energy efficient than the Proof of Work Mechanism. This is why Ethereum, and a few other blockchains, are now making the switch.

Among other things, ETH 2.0 is also much more scalable than its predecessor, which is great news for the continued growth of blockchain. So, in a nutshell, ETH 2.0 will significantly reduce the energy needs of the blockchain. This is great news for the environment and for people’s pockets.

Crypto power consumption is still an issue, but things are changing

While the cryptocurrency industry is still using absurd amounts of energy, this problem is in the process of being resolved. You can now invest in cryptos like IOTA or Stellar which are more respectful of our climate. In doing so, you will ensure that your involvement in the cryptocurrency industry does not do too much damage to the planet. While the crypto world still has a ways to go before it can claim to be eco-friendly, it’s exciting to see developers making the environment a priority.

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About author Katie Rees (122 published articles)

Katie is a writer at MUO and has experience writing travel and mental health content. She is particularly interested in Samsung and has therefore chosen to focus on Android in her position at MUO. She has written pieces for IMNOTABARISTA, Tourmeric and Vocal in the past, including one of her favorite pieces about staying positive and strong through tough times, which can be found at the link above. Outside of her professional life, Katie enjoys growing plants, cooking, and practicing yoga.

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