Bitcoin’s “Monstrous” Energy Needs

Anish Mukherjee
3 min readJun 8, 2021


Photo by Zbynek Burival on Unsplash

There’s recently been an uproar in the energy debate regarding bitcoin mining. On one side, there’s the environmentalists ( somewhat misplaced ) claim that BTC mining is driving up non-renewable energy usage, and leads to lot of energy wastage. On the other hand are Bitcoin maximalists, who say that it is not ‘wastage’ but by design, a fundamental feature. The Proof of Work consensus algorithm, they say, is what allows Bitcoin to establish authenticity and security in trustless environments without needing any third party.

What is mining?

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There’s a misconception that mining refers to creation of new bitcoins. New bitcoins are created and awarded as a byproduct of the mining process. The process of hashing ( inputting arbitrary data to get a deterministic string of fixed length as output ) a block of transactions repeatedly until it matches a fixed string ( decided by the Bitcoin protocol uniquely for each block ) is called hashing. The only way to crack the “fixed string” required by the protocol is brute force. The higher the resources, more the chances of cracking it and getting rewarded new bitcoins.

Hashrate has consistently gone higher with time, despite price volatility in bitcoin

The costs of mining

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All these brute force computations require energy. Bitcoin currently consumes around 115 Terawatt hours of electricity per year. This is comparable to the energy consumption of a small country like Sweden. So the question is, is this energy consumption necessary? Again, opinions tend to be polarized,from one side who thinks Bitcoin is some ponzi scheme ( really?) and so any energy consumed by it is wasted, to maximalists who say this energy consumptions is what secures the network, and that alternative consensus protocols ( like the Proof of Stake, which Ethereum is moving on to) do not offer such robust security and decentralization together.

For a bit of comparison, the traditional banking and gold industries each individually consume twice the amount of energy that Bitcoin consumes annually.

Bitcoin and clean energy

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If anything, bitcoin can drive the adoption of clean energy sources like solar, wind and hydro . It can and does utilize stranded energy. What’s stranded energy? Suppose there’s a very good hydro electricity source, but it is located so far away from dense population that it is not economical to generate power there and then transport it to places of demand. Bitcoin mining pools help liberate such energy sources. It also allows solar and wind farms to become operational quickly, before they can generate enough to join a grid. It can help free up solar electricity queued up in power grids. Estimates vary, but around 73–77% of bitcoin mining energy today comes from renewables, and a percentage of the miners not using renewables also buy carbon credits to offset their emissions.

Most mining today takes place in China, so there is not a very clear picture of what the carbon emissions look like. However recently their government has cracked down against coal based mining. Elon Musk and Michael Saylor have set up the Bitcoin Mining Council in North America to release detailed reports of bitcoin energy consumption. The biggest mining pools are opening themselves up to audits to further drive the adoption of renewable energy in mining.

Bitcoin mining has come a long way from when it began, when you could mine blocks using desktop CPUs. Now, it’ll probably take you a century or maybe longer to mine a block with a CPU .



Anish Mukherjee

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