Home
/
RELIGION & LIBERTY ONLINE
/
Does Bitcoin Have an Energy Problem?
Does Bitcoin Have an Energy Problem?
Apr 3, 2025 5:41 AM

Over the past couple of years I’ve fallen into a habit of infrequently pointing out the flaws, dangers, and threats to Bitcoin as a viable cryptocurrency. While I find the experiment in alternative currency intriguing, I’m just as intrigued by criticisms made against Bitcoin. Even if Bitcoin ultimately fails, it will provide numerous valuable lessons about peer-based innovation, and the criticisms that were warranted can help us avoid pitfalls in the future.

We won’t know, of course, which criticisms are valid or what will lead to the downfall of Bitcoin until after it happens (my guess is will be due to government regulation). But some criticisms are more interesting than others. Take, for instance, this point that I had never considered before: it takes a lot of energy (and money) to produce a single Bitcoin.

I was aware that the process of Bitcoin mining requires puting power and therefore must use up some amount of electricity. It just never occurred to me, until economist John Quiggin’s recent article, how much energy (and money) were required:

In the early days of Bitcoin, putations in question could be performed on ordinary puters. Nowadays, however, ‘miners’ use special purpose machines optimised for the particular algorithms used by Bitcoin. With these machines, the primary cost of the system is the electricity used to run it. That means, of course, that the only way to be profitable as a miner is to have access to the cheapest possible sources of electricity.

Most of the time that means electricity generated by burning cheap coal in old plants, where the capital costs have long been written off. Even in a large grid, with multiple sources of electricity, Bitcoin mining effectively adds to the demand for coal-fired power. puters run continuously, so they constitute a ‘baseload’ demand, which matches the supply characteristics of coal (and nuclear). More generally, in the process of decarbonising the energy supply system, any increase in electricity demand at the margin may be regarded as slowing the pace at which fossil fuels can be phased out.

The cost of coal-fired electricity can be as low as 5c/kWh for industrial users; mining with electricity costs above 10c/kWh is usually unprofitable. With the coin price currently a little above $US200, optimized systems can break even with electricity requirements of around $150 for each coin. At 5c/kWh, that’s three megawatt-hours (MWh) per coin. That corresponds, in turn, to about three tons of carbon dioxide for coal-fired electricity. Even at 10c/kWh, each Bitcoin mined using coal-fired power is associated with 1.5 tons of CO2 emissions.

The total circulation of Bitcoin is capped at 21 million, at which point there will be no more mining. Currently, there are just over 14.7 million in circulation. That leaves 6.3 million to be mined. At a cost of $150 a coin and 1.5 tons of CO2, it will cost nearly a billion dollars and create over 9 million tons of CO2 just to produce the remaining Bitcoins.

If we assume that all Bitcoins were mined as cheaply as $150 a coin, then it cost $3.1 billion to pay the electricity costs to put all those coins in circulation. It would also have created 31.5 million tons of CO2.

You don’t have to be a hysteric about climate change to find those figures troubling. That’s a lot of wasted energy for a “make-work” project. When this externality es more widely known, will it cause people to cool on Bitcoin?

Comments
Welcome to mreligion comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
RELIGION & LIBERTY ONLINE
Verse of the Day
  Commentary on Today's Verse   Commentary on 1 Corinthians 13:1-3   (Read 1 Corinthians 13:1-3)   The excellent way had in view in the close of the former chapter, is not what is meant by charity in our common use of the word, almsgiving, but love in its fullest meaning; true love to God and man. Without this, the most glorious gifts are...
Verse of the Day
  John 3:18 In-Context   16 For God so loved the world that he gave his one and only Son, that whoever believes in him shall not perish but have eternal life.   17 For God did not send his Son into the world to condemn the world, but to save the world through him.   18 Whoever believes in him is not condemned,...
The Intersection of Christianity and Libertarianism
A brief summary of the article discussing the intersection of Christianity and libertarianism.
Verse of the Day
  2 Corinthians 12:9 In-Context   7 or because of these surpassingly great revelations. Therefore, in order to keep me from becoming conceited, I was given a thorn in my flesh, a messenger of Satan, to torment me.   8 Three times I pleaded with the Lord to take it away from me.   9 But he said to me, My grace is sufficient...
Verse of the Day
  Commentary on Today's Verse   Commentary on James 3:1-12   (Read James 3:1-12)   We are taught to dread an unruly tongue, as one of the greatest evils. The affairs of mankind are thrown into confusion by the tongues of men. Every age of the world, and every condition of life, private or public, affords examples of this. Hell has more to do...
Verse of the Day
  Deuteronomy 4:29 In-Context   27 The Lord will scatter you among the peoples, and only a few of you will survive among the nations to which the Lord will drive you.   28 There you will worship man-made gods of wood and stone, which cannot see or hear or eat or smell.   29 But if from there you seek the Lord your...
Verse of the Day
  Commentary on Today's Verse   Commentary on Matthew 7:1-6   (Read Matthew 7:1-6)   We must judge ourselves, and judge of our own acts, but not make our word a law to everybody. We must not judge rashly, nor pass judgment upon our brother without any ground. We must not make the worst of people. Here is a just reproof to those who...
Verse of the Day
  1 Corinthians 1:10 In-Context   8 He will also keep you firm to the end, so that you will be blameless on the day of our Lord Jesus Christ.   9 God is faithful, who has called you into fellowship with his Son, Jesus Christ our Lord.   10 I appeal to you, brothers and sisters,The Greek word for brothers and sisters (adelphoi...
Verse of the Day
  Commentary on Today's Verse   Commentary on Deuteronomy 30:15-20   (Read Deuteronomy 30:15-20)   What could be said more moving, and more likely to make deep and lasting impressions? Every man wishes to obtain life and good, and to escape death and evil; he desires happiness, and dreads misery. So great is the compassion of the Lord, that he has favoured men, by...
Verse of the Day
  Commentary on Today's Verse   Commentary on Proverbs 10:19   (Read Proverbs 10:19)   Those that speak much, speak much amiss. He that checks himself is a wise man, and therein consults his own peace.   Proverbs 10:19 In-Context   17 Whoever heeds discipline shows the way to life, but whoever ignores correction leads others astray.   18 Whoever conceals hatred with lying lips and spreads...
Related Classification
Copyright 2023-2025 - www.mreligion.com All Rights Reserved