Climate change has become an important issue over the years due to concerns over environmental changes caused by the emission of greenhouse gasses into the atmosphere. Conversations have even reached the crypto space, and blockchain technology is being considered a potential tool to reduce carbon emissions.
Cryptocurrencies like Bitcoin (BTC) and Ether (ETH) that use the proof-of-work (PoW) mining algorithm have come under scrutiny due to their alleged energy expenditure. To see where this scrutiny comes from, it first needs to be known how much energy is used when mining PoW cryptocurrencies.
Unfortunately, estimating the amount of energy necessary to mine Bitcoin and other PoW cryptocurrencies cannot be calculated directly. Instead, it can be estimated by looking at the network’s hash rate and the power usage of the mining setups of expensive graphics cards.
Initially, Bitcoin could be mined with a basic computer, but as the network matured, the mining difficulty increased, requiring nodes to use more computing power to mine a new block. Due to the increased power requirements, to mine Bitcoin today, one would need multiple graphics cards as well as cooling systems to stop them from overheating. This is what has led to the high energy usage of PoW networks like Bitcoin and Ethereum.
According to the New York Times, the Bitcoin network uses around 91 terawatt-hours (91 TWh) of electricity annually, which is more energy used than countries like Finland. Other sources put this number at 150 TWh per year, which is more energy than Argentina, a nation of 45 million people.
However, as mentioned earlier, calculating Bitcoin’s energy usage is not a straightforward task, and there have been disagreements about the actual energy usage of the Bitcoin network. For example, Digiconomist claimed that Bitcoin uses 0.82% of the world’s power (204 TWh) while Ethereum uses 0.34% (85 TWh). Ethereum developer Josh Stark disputed the accuracy of these claims and highlighted Digiconomist’s tendencies to place estimations on the higher end while pointing out data from the…