You may have read articles claiming that Bitcoin’s rising energy consumption will lead to the demise of humanity. The World Economic Forum predicted in 2017 that “in 2020, Bitcoin will consume more power than the world does today”. Since then, hardly a week goes by without a major news outlet informing its audience that Bitcoin’s energy consumption is of major concern.
Does Bitcoin consume a lot of energy?
Yes, it does, and this is by design, to keep the network secure. The more energy that is pumped in to secure the Bitcoin blockchain, the harder it is for the blockchain to be hijacked.
The energy consumed by the Bitcoin mining network is calculated by its hash rate. According to the Cambridge Center for Alternative Finance (CCAF), Bitcoin mining currently consumes around 0.19% of global energy production and 0.56% of global electricity production.
Does Bitcoin consume too much energy?
Well, this will depend on who you ask. To put Bitcoin’s electricity consumption into some perspective, the International Energy Agency reported that air-conditioning units and electric fans consumed nearly 10% of global electricity in 2016, and it predicts that AC consumption will triple by 2050. Is this too much energy?
Determining what is ‘too much’ energy is subjective, depending on the value we place on whatever or whoever is consuming the energy.
Bitcoin enthusiasts will argue that Bitcoin’s current and future energy consumption is an acceptable price to pay for a decentralized, peer-to-peer, trustless, censorship-resistant, immutable, and borderless monetary system. Proponents and beneficiaries of the current fiat monetary system will likely fail to see the added benefits to humankind and declare Bitcoin a ‘waste’ of energy.
In the end it will be up to the market to determine if Bitcoin is an idea whose time has come.