There are several problems with Bitcoin, but for a minute let’s just look at the real-world environmental cost of all that digital wealth. Other people have written about this in the recent past, but energy consumption from Bitcoin mining is growing so rapidly that it’s worth updating the numbers.
According to Blockchain, over the last 24 hours Bitcoin miners used an estimated 135,950.77 megawatt hours of electricity.
(SEE UPDATE BELOW)
The US Environmental Protection Agency estimates that every megawatt hour delivered in that country generates 1,307.2 lbs of carbon dioxide, or 593 kilos. That’s based on an energy mix that includes 37% coal, 30% gas, and 19% nuclear. Mind you, if your computers are running in China, where the grid relies more heavily on coal, this consultancy estimates a carbon cost of 960 kilos per megawatt hour.
As a conservative estimate, let’s round it off and say bitcoin mining generates 600 kilos of CO2 per MWh.
That means in the last 24 hours alone, Bitcoin miners have added 81,570 metric tons of CO2 to the atmosphere.
Again, going back to the EPA’s estimates, the average passenger vehicle in the US generates 5.1 metric tons of CO2 every year, or 13.97 kilos a day.
That means in the last 24 hours, bitcoin mining operations generated as much CO2 as 5,838,940 passenger vehicles.
And that’s just the CO2 emissions — we’re not counting the environmental or social impacts of real-world mining, which is where all that gas and coal and uranium comes from.
As the equations required to generate new Bitcoins become necessarily more complex, these real-world costs will only continue to rise. Not that I expect the people doing the mining to care. They burned $20 million worth of electricity in the last 24 hours for total commissions worth $3.6 million. Clearly that’s not where they make their money.
Here’s what I see: A few speculators getting rich off a currency bubble, at the expense of public energy providers and the rest of us who are trying to mitigate and adapt to climate change. Is that really the future?
UPDATE: Okay, I’ve clearly wandered down a rabbit hole with this Bitcoin post. I believe my original point stands, but first I have to address some questions of methodology.
It’s been brought to my attention on Twitter that the energy use estimates on Blockchain.info are based on the assumption that computers tasked with mining are using traditional processors. However, this fall a series of mining-specific ASIC chips hit the market, delivering up to 10 times more energy efficiency.
The release of that new hardware has coincided with a sharp increase in the number of calculations being performed across the network, as illustrated by this chart. It seems fair to say that much of this new activity is happening on more efficient hardware. I haven’t yet found an accurate estimate of how many people use the new chips and what the overall network efficiency would be.
Another wrinkle: Police in Germany arrested three suspects earlier this month on fraud charges. They’re accused of using malware to, in effect, enslave unsuspecting peoples’ computers to mine bitcoin for the benefit of the hackers. I doubt the victims have ASIC chips in their PCs. And you can also participate in this kind of outsourced mining voluntarily, again with a regular computer. So a certain proportion of overall calculations are being done by ordinary internet users, whether willing or unwilling. Again, I don’t have an accurate estimate.
It looks like the complexity of Bitcoin verification will increase, and at the same time so will hardware efficiency. Clearly there’s an arms race underway.
The reason I created this post is to point out that wealth accumulation of any kind requires that you submit to a formula that creates certain externalities. That’s true of the existing global financial system, and it’s true of online currencies. For now, the “value” of Bitcoin does not take into account the real-world consequences of digging coal out of the ground and burning it. The question is, can that continue forever?