Key Takeaways:
A new report says Bitcoin consumes 91,510 GWh of energy per year – more than Ecuador, Bulgaria, Finland, and Sri Lanka.
Crypto experts dismissed the Utilities Now study as flawed, out of context, and short on nuance.
They say BTC “is now the world’s most sustainably powered industry,” with 58% of the energy used to mine Bitcoin coming from renewables.
A new report by Utilities Now, a consumer platform, claims that Bitcoin now uses more energy each year than over 80 countries combined. However, analysts interviewed by Cryptonews dismissed the report as flawed.
The report by Utilities Now lacks context, omits critical factors, and ‘unfairly’ singled out Bitcoin while ignoring comparable energy-intensive industries like traditional finance (TradFi), they say.
Utilities Now helps people find affordable electricity rates. Recently, the platform released a report saying, among other things, that:
Bitcoin consumes 91,510 gigawatt-hours (GWh) of energy per year, which is more than that of Ecuador (90,000 GWh), Bulgaria (87,000 GWh), and Sri Lanka (86,000 GWh).
Bitcoin uses 250 GWh per day—enough to power 8.4 million U.S. homes for 24 hours or sustain Barbados for 91.5 days.
Bitcoin’s daily energy demand equals 305 days of Chad’s total annual power consumption or 229 days of Somalia’s.
“Bitcoin’s growing energy appetite is equal parts ‘tech story’ and ‘global wake-up call,’” a spokesperson said. “With economic and environmental consequences mounting, energy priorities are being reshaped worldwide.”
For its report, Utilities Now analyzed data from Cambridge University’s Bitcoin Electricity Consumption Index, and the U.S. Energy Information Administration (EIA).
It compared Bitcoin’s energy use with the daily and annual energy use of 150 countries. The authors calculated the number of days that Bitcoin’s daily electricity consumption could power each country.
Cambridge University’s data has been questioned for using old datasets that exclude renewables from BTC’s energy mix, but critics have latched onto such data, using it as canon fodder to discredit the cryptocurrency.
Analysts Say Report Overestimates Bitcoin’s Energy Use
Two experts who spoke to Cryptonews criticized the report, saying while Utilities Now raises a key issue around consumption, it mischaracterizes the problem and raises more alarm from a biased perspective.
Mason Jappa, CEO of U.S. Bitcoin mining company Blockware Solutions, said the report overestimates Bitcoin’s energy consumption by relying on outdated assumptions about mining hardware efficiency.
He said the underlying data used in the report assumes an average ASIC, or application-specific integrated circuit, miner efficiency of 22.15 joules per terahash (J/TH). However, newer models are “far more efficient than this.”
Even the Antminer S19 XP, “released as far back as 2022, has an efficiency of 21 watts per terahash (W/TH)”, Jappa noted. In any case, many listed Bitcoin miners now report average fleet efficiencies below 20 W/Th, suggesting actual energy use is lower than estimated.
ASICs are hardware built specifically to mine Bitcoin more efficiently. The process of BTC mining involves solving complex mathematical problems to verify transactions and add them to the blockchain.
ASICs perform these calculations a lot quicker than graphics processing units (GPUs) or central processing units (CPUs).
Oleksandr Lutskevych, CEO of crypto exchange CEX.io, previously told Cryptonews that over the last decade, the energy efficiency of mining hardware like ASIC miners improved by 200 to 1,000 times.
Also, most Bitcoin application-specific integrated circuit miners are reportedly now 100% recyclable. However, mining on the Proof-of-Work Bitcoin blockchain consumes a lot of electricity and has been blamed for causing climate damage.
Renewables Dominate Bitcoin Energy Mix
Jappa said the Utilities Now report neglects the role of renewable energy in Bitcoin mining. “Alongside the omission of renewable energy sources, this report also fails to consider two other important factors,” he stated.
One factor is that Bitcoin miners make use of “stranded energy” – excess power from sources such as natural gas – which would otherwise go unused or be flared. The other is the impact on electricity prices. The Blockware CEO quipped:
“The constant demand from Bitcoin miners provides a financial incentive for energy producers to invest into more production, achieving more efficient economies of scale, thereby lowering energy prices for retail consumers. As such, how much have they lowered retail energy prices?”
According to Daniel Batten, a climate tech investor and environmentalist, BTC “is now the world’s most sustainably powered industry,” with roughly 58% of the energy used to mine Bitcoin coming from renewables such as hydropower, solar, and wind. That figure stood at 33% in 2020-2021.
Commenting on the Utilities Now report, Batten said the study “relied on data that is now very out-of-date” and “makes the mistake of conflating energy use with environmental damage.”
“Not only are the two not the same thing, but the flexible way in which Bitcoin uses energy has been shown in 15 peer-reviewed studies to have strong environmental advantages,” he told Cryptonews, adding:
“By drawing a false equivalence between energy consumption and environmental damage and ignoring the now substantive body of evidence showing Bitcoin’s positive environmental externalities, the report provides a perspective that lacks the necessary nuance, and knowledge of Bitcoin mining, to be taken seriously by policymakers and regulators.”
Batten says the report is one-sided and ignores Bitcoin’s positive effects on the environment, such as halving the payback time for solar farms, stabilizing electricity grids, and cutting methane emissions from landfills.
According to the Bitcoin Mining Council, the Bitcoin network’s emission intensity—which measures the amount of carbon emissions released per unit of power used—has declined by 50% over the last four years.
It means that every time someone sends a transaction over the Bitcoin blockchain or uses the asset as a store of value, they are “net emission reducing,” Batten explained in a previous interview with Cryptonews.
Bitcoin vs Traditional Finance: A Fairer Comparison?
Perhaps most glaringly, Utilities Now fails to contextualize Bitcoin’s electricity consumption with that of the industry it is directly disrupting – traditional finance.
Traditional finance relies on extensive infrastructure—office buildings, data centers, ATMs—that use huge amounts of electricity generated from burning fossil fuels like coal. Whereas BTC mining operations can relocate to regions with abundant renewable energy sources.
As the Blockware CEO Jappa notes, an honest analysis would examine how Bitcoin stacks up against banking systems or other store-of-value assets, which include gold, real estate, and even U.S. Treasuries.
“The report has a major problem from the outset because it frames energy usage as ‘inherently bad,’” Jappa tells Cryptonews.
“Criticizing the consumption and production of energy is on par with criticizing human life itself. As such, the premise of this article should be rejected entirely.”
He questioned the legitimacy of the report’s findings, saying the authors demonstrate an “anti-Bitcoin bias.” Jappa said:
“Even if you start from the radical premise that energy consumption is inherently bad, then an honest inquiry would not compare Bitcoin’s energy consumption to an arbitrary selection of countries, rather, it would compare to the energy consumption of other store-of-value assets.”
Bitcoin’s power consumption is nowhere near that of the legacy banking system. A research report published by cryptographer Michel Khazzaka in 2022 found that the traditional banking sector used 4,981 terawatt-hours of electricity per year – 40 times more energy than Bitcoin. But the figures aren’t universal.
A 2022 report from crypto firm Galaxy Digital showed that the banking system used around 264 terawatt hours of electricity each year – three times as much as Bitcoin’s.
On the other hand, the gold mining sector consumed 265 terawatt-hours of electricity in 2023, according to some reports. That’s more than twice as much as the power used in Bitcoin mining.
Both Jappa and Batten agree that energy use isn’t inherently bad because it drives economic growth and human progress. The real question is whether the benefits justify the costs – and whether industries are moving toward sustainable practices.
“Bitcoin’s energy consumption and the emissions that occur as a result, do not occur in a vacuum,” Batten detailed.
“Bitcoin obviates more emission-intensive industries: Banking as a method of transacting, and gold as a store of value. This would be like claiming ‘EVs create emissions’ without acknowledging that it obviates a much more emission-intensive fossil-fuel-based technology,” he added.
Utilities Now had not responded to questions from Cryptonews at the time of going to press.
The post Does Bitcoin Energy Use Truly Exceed 80 Countries? Analysts Say ‘No’ appeared first on Cryptonews.
