How Much Energy Does Bitcoin Really Use? Less than you think

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Crypto intelligence firm Coin Metrics released a report on Tuesday outlining how the energy consumption of Bitcoins can be measured by scanning the blockchain for clues linking activity on the network to specific, powerful machines.

For years, Bitcoin’s electricity consumption has been a controversial topic, as critics point to the power-intensive nature of transaction validation on proof-of-work networks. Continually performing complex calculations in hopes of solving the next block of Bitcoins, thousands of machines make guesses about networks like Bitcoin in hopes of a reward.

As government organizations such as the White House put pressure on digital asset mining companies, primarily through its 30% excise tax proposal, the report aims to establish a more precise approach to determining the overall energy consumption of Bitcoin miners and draws on the methodologies of studies conducted by other institutions in the past.

Obviously, there’s this massive debate about energy consumption, the report’s lead author, Karim Helmy, told Decrypt in an interview. But another primary motivation for the studies is to capture network-wide statistics that serve as a very good benchmark for the competitiveness of miners’ machines, he said.

By taking a closer look at the data included in the constant stream of miner guesses, Coin Metrics researchers say they can better infer Bitcoin’s overall electricity consumption, by matching the fingerprints of each guess with the profile. unique produced by some machines.

Called ASICs, these power-hungry machines are designed largely to make as many guesses to solve the next block of Bitcoins as quickly as possible. The study looked at 11 different ASICs from four manufacturers, including models released as early as 2016 through last year.

Tying network activity to specific machines reduces the margin for overestimating Bitcoin power consumption because the models can take into account the efficiency of each ASIC, the report says.

Previous attempts to assess Bitcoin power consumption have missed a critical element that can only be achieved with this kind of ASIC-level data: hardware efficiency, the report says. As the mining industry has evolved, ASICs have become much more efficient, generating more hashes per second per unit of power consumed.

The Coin Metrics report found that the power consumption of Bitcoins has consistently been lower than other studies that did not include ASIC-level data, especially those conducted by the University of Cambridge and the Digiconomist.

For example, Coin Metrics’ estimate for miner energy consumption last May is 16% lower than the University of Cambridge’s Bitcoin Energy Consumption Index, which the report says is least. industry’s current gold standard.

While Coin Metrics claims its model is more accurate than the Cambridge representation, which was pushed back by the digital asset industry after its release, Coin Metrics still praised academic researchers for their work.

The figures produced by Cambridge were groundbreaking, and the methodology presented in this report is basically a refinement of this existing work, the report says.

In addition to producing accurate energy statistics, the report also seeks to capture data for miners to benchmark how their rigs compare to the competition in terms of efficiency, Helmy explained.

If you’re a miner, one of the key elements of any model about your projected future profitability is an estimate of network-wide efficiency, he said. You want to know where your fleet stands compared to other miners.

Using the data, the companies’ report also paints a picture of which ASICs have gained popularity over time, as well as which ones have been discontinued. This is useful from a security perspective, Helmy said, because tracking hardware manufacturer dominance can help identify potential points of centralization.

In addition to network-wide efficiency metrics, Coin Metrics was also able to produce estimates for e-waste, taking into account how often each ASIC needs to be replaced.

From the energy consumption of its miners to the associated e-waste that companies produce, the environmental impact of crypto has come under intense scrutiny over the past year. This has been true in the White House and in art installations like Benjamin Von Wongs Skull of Satoshi.

But breakthroughs, such as the new Coin Metrics method, could lead to greater nuance in the debates surrounding Bitcoin’s energy use and open the door to more robust, data-driven discussions with gleaned insights. in the network blockchain.

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