About That Sensationalist Bitcoin Electrical Consumption Story

Authored by Charles Hugh Smith via OfTwoMinds blog,

Check the context before uncritically accepting sensationalist conclusions.

Let"s start with a primer on how to write a sensationalist story that can be passed off as "journalism:"

1. Locate credible-sounding data that can be de-contextualized, i.e. sensationalized.

 

2. Present the data as "fact" rather than data that requires verification by disinterested researchers.

 

3. Exaggerate the data as much as possible and set the tone and context with emotionally laden words: "shocking," etc.

 

4. Select a context that sensationalizes the conclusion.

Now let"s take a look at a story that has been swallowed whole, with little to no fact-checking or disinterested inquiry: bitcoin"s electrical consumption, i.e. the electricity consumed by mining/maintaining bitcoin"s blockchain.

One Bitcoin Transaction Now Uses as Much Energy as Your House in a Week

Let"s start by stipulating that energy consumption is a consequential matter worthy of serious inquiry. It"s important to measure the energy consumption of all the systems that operate within the current status quo, and compare the consumption levels of these systems.

With that in mind, let"s take a look at the story.

Right off the bat, the context we"re offered to grasp the enormity of bitcoin"s mining consumption is the electrical consumption of Nigeria, a nation, we"re breathlessly informed, with 186 million residents. Wow! That"s a crazy amount of electrical consumption, right?

Let"s do some very basic fact-checking before we accept sensationalist conclusions, shall we?

Nigeria consumes about 24 billion kWh annually, while the U.S. consumes 3,913 billion kWh annually.

So Nigeria uses 3/5th of 1% (0.6%) of the electricity the U.S. consumes.

Now let"s compare that electrical consumption with the amount of electricity consumed in the U.S. by residential devices and chargers on stand-by, i.e. appliances, devices, chargers, gizmos, etc. that aren"t in use and doing no work but that are still consuming electricity.

About a quarter of all residential energy consumption is used on devices in idle power mode, according to a study of Northern California by the Natural Resources Defense Council. That means that devices that are “off” or in standby or sleep mode can use up to the equivalent of 50 large power plants’ worth of electricity and cost more than $19 billion in electricity bills every year.

source: Just How Much Power Do Your Electronics Use When They Are ‘Off’? (May 7, 2016, New York Times)

(Please read the article to find out just how much power the 50+ gadgets in your home consume doing absolutely zero work.)

According to the U.S. Energy Information Administration, annual residential electrical consumption totals 1,410 billion kWh.

So 25% (the amount of household electricity consumed by stand-by devices) of 1,410 billion equals 352 billion kWh consumed annually by residential appliances and devices on stand-by in the U.S.

Now let"s compare the annual electrical consumption of Nigeria (24 B kWh) with the annual residential electrical consumption of devices on stand-by in the U.S.

The annual electrical consumption of Nigeria (24 B kWh) is 6.8% of the annual electrical consumed by household devices on stand-by in the U.S. That means the supposed consumption of bitcoin mining is 1/14th of the power lost to residential devices on stand-by in the U.S., devices doing essentially nothing.

Now let"s add in all the appliances and devices in government and private-sector offices on stand-by. Let"s conservatively estimate another 150 B kWh lost to all this stuff on stand-by.

Now let"s multiply the total of electricity lost to stuff on stand-by mode (doing no work whatsoever) in the U.S., 500 B kWh annually, by five, since the U.S. consumes roughly 20% of all electricity globally.

Electricity production 2016 (Enerdata)

The United States’ share of world energy consumption (EIA)

This gives us an estimate of all the electrical power lost to electrical appliances and devices on stand-by globally every year: 2,500 billion kHh. 1% of that wasted electricity is 25 billion kHh. If you reckon this seems high, let"s shave these totals to 1,500 billion kHh and 15 billion kHh.

Let"s go back to the story about bitcoin"s consumption of electricity which tells us "a shocking 215 kilowatt-hours (KWh) of juice (is) used by miners for each Bitcoin transaction."

But then a few paragraphs down, we discover the electricity per transaction might only be 77 kWh-- nobody really knows for sure. Hmm. 77 is 36% of 215, so the "shocking" consumption might overstate actual consumption by a factor of three?

Let"s choose a number between 77 and the "shocking" 215, since nobody really knows what the real number is: shall we guesstimate 135, or 2/3 of the high guesstimate? That would drop the annual consumption of bitcoin mining from 24 B kWh annually to 15 B kWh, less than 1% of the electricity wasted annually on stand-by devices doing no work whatsoever.

And so, um, bitcoin mining is a threat to the planet because it consumes less than 1% of all the electricity squandered by appliances and devices on stand-by? If we want to stop wasting so much energy, perhaps we should start by mandating near-zero stand-by power consumption for the hundreds of millions of devices which are not in use that are nonetheless sucking up electricity every second of every day.

Here"s another thought: check the context before uncritically accepting sensationalist conclusions.

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Will Bitcoin Mining Consume All The World"s Current Electricity Production By Feb 2020?

Via PowerCompare.co.uk,

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.

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.

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 below). 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)

All maps created using Mapchart.net.

Bitcoin Mining Electricity Consumption Vs Countries

The map above shows which countries currently consume more or less electricity than that consumed by global Bitcoin mining.

The map below shows how much more or less bitcoin mining energy consumption compares to each countries energy usage with 100% being equal.

E.g. Ireland currently consumes an estimated 25 TWh of electricity per year, so global Bitcoin mining consumption is 116%, or 16% more than they consume. The UK consumes an estimated 309 TWh of electricity per year so global Bitcoin mining consumption is only equivalent to 9.4% of the UK total.

Global Bitcoin Mining consumption compared to each country’s electricity consumption

The map below shows which countries in Europe consume more or less electricity than Bitcoin mining:

Which European countries consume more or less electricity than the amount consumed by global bitcoin mining

As mentioned, above the data for Bitcoin mining energy consumption comes from the Bitcoin Energy Consumption Index. You can read about their assumptions here.

Electricity consumption data mostly comes from the CIA via Wikipedia and is mostly for 2014, since that’s the most recent year available. Unlike some other sources it includes, residential, commercial and industrial use, so may be higher than other figures quoted elsewhere.

Bitcoin Mining Electricity Consumption Vs US States

While doing the research we also though it might be interesting to compare Bitcoin mining energy consumption to US states. So we created the map below:

Overall, 12 States consume less electricity than Bitcoin Mining (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.