Energy Consumption of Bitcoin
Energy is essential to Bitcoins operation as the Bitcoin network uses energy to distribute the money within its economy and to secure its history of transactions. In the early days of Bitcoins existence, users were able to compete for newly issued Bitcoins just by running a laptop or a gaming computer using a small amount of electricity.
Today, to compete, miners need to use special hardware, reliable and cheap power and have abundant energy. The difficulty to mine Bitcoin increases as competition increases, and as a result, using more electricity as the network continues to grow.
Bitcoin’s energy consumption can only be estimated and cannot be directly measured for a few reasons such as:
Miners can operate pseudonymously
Miners use different hardware equipment with varying energy efficiencies
There are differences in how effectively mining facilities use power
Therefore, you can only use theoretical models to approximate Bitcoins electricity consumption.
The University of Cambridge electrical consumption models can be found here:
There is an Environment, Social & Governance (ESG) movement which has created a narrative that Bitcoin is bad due to its energy consumption. The general ESG mandate is to lower carbon footprints and eliminate and reduce the use of energy from sources such as coal, gas and petroleum.
However, Bitcoins use of energy can be viewed as a benefit to society, more than the properties of this superior money. As clean energy gradually gets cheaper and the price of Bitcoin increases, Bitcoin miners can help subsidize green projects and shift to renewable energy sources such as geothermal, solar and wind power. As renewables become more popular and the price becomes cheaper than “dirty” energy, Bitcoin can begin to fully incorporate sustainability into its everyday operations, thus pushing clean energy forward, while reducing the carbon footprint of the network.
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