Wednesday, September 24, 2014

Does the Bitcoin Network Waste Lots of Power?

One of the big complaints about Bitcoin -- and cryptocurrencies in general -- is that they're using "tons" of power and not really accomplishing any "useful" purpose. While it's certainly true that all of the ASICs out there hashing away to secure the Bitcoin network (and mine coins in the process) use power, it's important to put things in perspective. Let's start with a rough estimate of the power used by all the systems connected to the Bitcoin network.

At present, the total hash rate of the Bitcoin network is around 240,000 TH/s, though of course that changes on almost a daily basis -- you can check the current approximate hash rate any time at BitcoinWisdom (or any number of other sites). The most efficient Bitcoin ASICs right now can do around 3 TH/s while drawing 2000 W (give or take), while upcoming ASICs may be as much as two to four times as efficient (e.g. around 3 TH/s while drawing only 600 W). Obviously not every ASIC currently hashing on the Bitcoin network is going to be the most efficient option (side note: I finally shut down my AntMiner S2 ASICs as their hash rate to power is no longer profitable), but let's just estimate that most ASICs today are averaging a 1:1.5 ratio of TH to power.

What that means is that our 240,000 TH/s of hash rate is using 360,000 kW. (By way of comparison, if every current ASIC was a KnC Neptune doing 3 TH per 2000 W, the Bitcoin network would only use 160,000 kW.) 360,000 kW becomes 360 MW, and 24 hours per day means the Bitcoin network is using around 8640 MWh (Megawatt Hours) each day, and 259,200 MWh per month. So how does that compare with the power used for other tasks?

According to Wikipedia, the total power consumed in the US per month was 2,183 TWh, or 2,183,000,000 MWh. That means the total power used by the entire Bitcoin network is approximately 0.012% of the US energy use. But Bitcoin isn't just a US phenomenon, so we really need to look at the entire world. In 2008 the worldwide approximate power use was 143,851,000,000 MWh, or 11,823,000,000 MWh per month. It's likely power use has increased since then, but let's just stick with that number for now. That means the Bitcoin network "waste" of power accounts for a whopping 0.0022% of all energy consumed in the world.

Let me put that figure in different terms. The average power draw of a US household is 10,837 kWh per year, or 29.7 kWh per day. That's the same as a continual power draw of around 1250W from all the lights, appliances, computers, etc. in your home. 0.0022% of the average power used by an American home would equal 0.0275 W. Or in other words, shutting down all Bitcoin related hardware in the world would be like the average American home cutting their power use by $0.00008 per day.

Now, it's entirely possible I screwed up on the math somewhere. Maybe I'm even off by a factor of 1000, but I'm pretty sure that's not the case. I've checked things multiple times and I think I've got it reasonably close, understanding that this is merely an estimate and I could easily be off by a factor of 2-4X on a few guesses (e.g. maybe the average efficiency of ASICs is much lower than my estimate). Still, if you spot an error, by all means let me know.

The bottom line is that the amount of power being used globally for the Bitcoin network is pretty tiny as a percentage. When you think of all the other things out there consuming power -- lights on empty roads and parking lots, computers that sit idle at large corporations, etc. -- there are far worse ways of using power. Inherently, people and businesses consume power because they find it to be a good use of their money -- cost vs. benefit. There's no need to try and halt the use of power by cryptocurrencies as they'll eventually reach equilibrium on their own.

Bitcoin hashing might be consuming 360 MW (which is still about one fourth of the infamous 1.21 Gigawatts number from Back to the Future), but how much power is consumed by all of our financial institutions? I'm absolutely sure it's far more than 360 MW, so by that token the Bitcoin network is actually a much more efficient way of doing things.

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