BHUBANESWAR: A new research into the energy consumption of Bitcoin indicates that, by the end of the year, the cryptocurrency could account for a whopping half of a per cent of the world’s total energy demand. It doesn’t sound like much, but that is roughly equivalent to the energy needs of Austria, a country of nearly nine million people. Bitcoin’s burgeoning electricity demands have attracted almost as much attention as the cryptocurrency’s wildly fluctuating value. However, estimating exactly how much electricity the bitcoin network uses, necessary for understanding its impact and implementing policy, remains a challenge.
“To me, half a per cent is already quite shocking. It’s an extreme difference compared to the regular financial system, and this increasing electricity demand is definitely not going to help us reach our climate goals,” said economist and blockchain specialist Alex de Vries, who works at PwC, Netherlands.
The estimates, based on economics, put the minimum current usage of the Bitcoin network at 2.55 gigawatts, which means it uses almost as much electricity as Ireland. A single transaction uses as much electricity as an average household in the Netherlands uses in a month. By the end of this year, he predicts the network could be using as much as 7.7 gigawatts—as much as Austria and 0.5 per cent of world’s total consumption.
If the price of Bitcoin continues to increase the way some experts have predicted, De Vries believes the network could someday consume five per cent of the world’s electricity. As detailed in de Vries’ new paper, presently nobody knows exactly how much energy Bitcoin is using. “Right now, the information available is pretty poor quality overall,” de Vries said. “Getting a good estimate is important in determining the sustainability of cryptocurrencies moving forward and in helping shape policy around them.”