Total World Production & Consumption
First, we consider Bitcoin’s share of the world’s total yearly electricity production and consumption. A reference to global energy production has been added as well to account for the wide array of industries that primarily rely on sources other than electricity (e.g. diesel fuel). In a similar fashion, some Bitcoin mining facilities are known to directly tap into energy assets at the production point rather than procuring electricity via the regular grid.
*Electricity is generated by transforming primary energy sources into electrical power. A significant share of the input energy is lost during this conversion process, with the exact proportion depending on fuel type and power plant efficiency. For simplicity, we assume an average conversion loss of 61% based on a 2020 study by the US Energy Information Administration (EIA) on the 2019 US electricity flow.
International Energy Agency, World Energy Balances (2020), 2018 est.
International Energy Agency, Key World Energy Statistics (2020), 2018 est.
International Energy Agency, Electricity Information (2020), 2018 est.
Industrial & Residential
Next, we set up Bitcoin mining against other industrial and residential uses of electricity (or energy, depending on the nature of the activity).
Bitcoin’s closest and most referenced real-world analogue is gold. While they arguably share utilitarian similarities as stores of value, gold and Bitcoin also demonstrate common consumptive traits, (e.g. the proportional relationship between unit price and increased production resulting in increased resource consumption).
Mudd, G., Global trends in gold mining: Towards quantifying environmental and resource sustainability (2007), 2019 est. based on own calculations
Note: energy intensity estimates of gold mining on a global scale are difficult to verify and can vary considerably. This figure is based on an older estimate from 2006 which may not be representative of the state of the gold mining industry today. It nevertheless provides a useful input for modelling a simple baseline scenario that assumes little infrastructural upgrades in gold mines over the last decade.
We would like to end this brief excursion on a more amusing note, with a wink to our parent institution and a dearly held British tradition.
Did you know that the amount of electricity consumed by the Bitcoin network in a single year…
University of Cambridge, Facts & Figures | Sustainability (2021), 2017/18 est.
Drysdale, B. et al, Flexible demand in the GB domestic electricity sector in 2030 (2015), 2012 est.