We hear a lot about blockchains consuming excessive amounts of electricity. You’ve probably heard that bitcoin uses more energy than most countries, for example.
That’s true! If you ranked bitcoin against the rest of the world in terms of energy consumption, it would be the 47th largest energy consumer in the world, according to a recent series of tweets from Tim Swanson.
for perspective, ~50.5 billion kWh / year would place the Bitcoin network at around the 47th largest on the list of countries by electricity consumption, right between Algeria and Greece:https://t.co/07tLoF8grc
— Tim Swanson (@ofnumbers) August 24, 2018
There’s no single stat that shows the energy consumption of the bitcoin network. Nobody tracks the real-time energy consumption of bitcoin.
Instead, to calculate this figure, Swanson looked at the hashrate of the bitcoin network, which is about 50,000,000 terahashes.
This is the equivalent of 3,846,000 S9s, or over 3 million S9s.
Swanson admits that not every miner uses the S9. However, it’s the most common miner available today, so it provides a good approximation for power consumption on the bitcoin network. Other miners may be more or less efficient, but they have comparable power to the S9.
The vast majority of miners are left running 24 hours a day, 7 days a week. The S9 draws about 1500 watts. Swanson multiplied 1500 watts by 24 hours a day to get an approximation of 36 kWh per machine per day. When you multiply that by the number of S9s securing the network, you get:
- 138.4 million kWh of energy consumption on the bitcoin network per day
- 50.5 billion kWh per year
If you check the list of countries by energy consumption, you’ll find that places bitcoin among the top 50.
Swanson admits this is a lower boundary because it doesn’t include other mining costs. Miners pay for more than just the electricity consumption of their miners, for example. They also need to cover cooling costs. Some older miners are also highly inefficient, and these miners consume more electricity due to subsidies a mining farm might receive.
When you consider these costs, bitcoin’s energy consumption rises significantly. One study from researchers at PWC from earlier this month showed that bitcoin mining activity uses more energy than Austria.
Austria is a country that generates $415 billion per year in economic activity. Bitcoin, meanwhile, processed about $70 million in payments in the month of June. Here’s what Swanson had to say about it on Twitter:
you don’t have to be a hippy tree hugger (i’m not) to clearly see that an proof-of-work blockchains (such as Bitcoin and its derivatives) are currently consuming significantly more resources than they create.
yet this math is hand-waved away on a regular basis by coin lobbyists.
— Tim Swanson (@ofnumbers) August 24, 2018
Swanson expanded on his Twitter thread in a recent blog post on his official website, OfNumbers.com. In that blog post, Swanson looked at the electricity consumption of bitcoin, Bitcoin Cash, Ethereum, Litecoin, and Monero. These coins represent some of the most popular proof of work (PoW) coins in the world.
Is proof of work fundamentally flawed? Let’s look at Swanson’s analysis.
Bitcoin Cash (BCH) Energy Consumption
Bitcoin Cash’s energy consumption is similar to the bitcoin network. Both networks use the same SHA256 proof of work hash function, which is why miners use mostly the same equipment to mine BTC and BCH.
BCH’s network hashrate has been hovering around 4 to 4.5 exahashes the past month, or 4.25 exahashes. When you do the math – similar to the BTC math above – you get a total of 327,000 S9s mining BCH while consuming 1080kWh per month. This gives you 11.77 million kWh of energy consumption per day or 4.30 billion kWh of energy consumption per year.
This places the BCH network between Moldova and Cambodia in terms of annual energy consumption, at 124th on the list of energy-consuming countries.
Does BCH generate sufficient value to justify its cost? Cambodia has an annual GDP of $22 billion while Moldova has an annual GDP of $8 billion. BCH, in the past year, has processed between $4 million and $10 million of merchant payments each month.
Ethereum (ETH) Energy Consumption
Swanson did similar math with the Ethereum network. He estimated there were 10 million GPUs mining on Ethereum. Yes, Ethereum ASICs became more popular over this past summer, but most Ethereum mining continues to take place with GPUs.
Even if you assume every miner is using the most efficient Ethereum miner, the Innosilicon A10 scheduled to be released next month, you get a daily energy consumption of 12.6 million kWh consumed by 618,557 A10 machines.
When you run the numbers, you get an annual energy consumption of 8.65 billion kWh, placing Ethereum at 100th on the list of electricity consuming nations between Guatemala and Estonia. Guatemala generates around $72 billion per year of GDP and Estonia generates $26 billion.
It’s hard to estimate the economic benefit of Ethereum. Ethereum wasn’t designed to be a global payment platform. Instead, it was designed to be a global supercomputer. Nevertheless, Swanson finds it “unlikely that the Ethereum network is generating economic activity equivalent to either Guatemala or Estonia.”
Litecoin (LTC) Energy consumption
Litecoin was built on the original bitcoin codebase. Today, most Litecoin mining is done with the L3+ or L3.
Swanson, in his analysis, assumed that miners were using the L3+ to mine Litecoin. Based on that analysis, a single L3+ will consume 19.2 kWh per day, which means 600,000 miners will consume 11.5 million kWh per day. This gives a total of 4.2 billion kWh per year, which is roughly the same amount as BCH.
LTC’s energy consumption places it in the same position as BCH: between Moldova and Cambodia.
Litecoin does have daily transaction volume, but again, it’s unlikely that the benefits are anywhere close to the benefits provided by the GDP of Cambodia and Moldova.
Monero (XMR) Energy Consumption
Monero mining, like Ethereum mining, is dominated largely by GPUs. Monero made headlines earlier this year for introducing an ASIC-resistant change, preventing large-scale miners from dominating the network like we’ve seen with BTC and BCH.
Swanson’s analysis revealed that the hashrate of the XMR network is around 475 MH/s. A single Vega 64 generates about 2,000 hashes per second. If we assume the equivalent of 237,500 Vega 64s are being used, and each Vega 64 consumes 3.84 kWh per day, then Monero mining consumes 912,000 kWh of electricity per day and 332 million kWh per year.
This places Monero’s energy consumption somewhere between Haiti and the Seychelles. Haiti generates $8.4 billion in GDP per year, while the Seychelles has a GDP of $1.5 billion. Monero’s transaction volume has remained flat over the past year, and the economic impact of Monero is far less than either country.
Ultimately, Swanson’s analysis compares the “efficiency” of PoW networks in terms of creating value. His analysis shows that countries are getting far better “value” from their energy consumption than PoW networks like BTC, BCH, ETH, LTC, and XMR.
Bitcoin miners spend an extraordinary amount of electricity to mine bitcoin, but they generate significantly less value than comparable countries. Bitcoin’s energy consumption, for example, is similar to the country of Austria. The GDP of Austria is $386.4 billion USD per year. Bitcoin, meanwhile, processes about $70 million of transactions per month, or $840 million per year. It’s not even close! We see similar numbers for other cryptocurrencies.
You can read the full analysis by Tim Swanson here.