Bitcoin has a bad reputation for using too much energy (with the implied criticism that this energy isn’t being used for anything worthwhile). This isn’t a completely fair assessment; while Bitcoin does use a lot of energy, we live in an energy-intensive world. Bitcoin is far from the only industry using a lot of energy, and there are arguments to be made that Bitcoin and other cryptocurrencies are providing more value than any number of items on my list below.
|ENERGY USAGE||TERAWATT HOURS PER YEAR|
|1||Total Annual Global Electricity Consumption||22,562|
|2||Global Air Conditioner Use||2000|
|3||Residential Energy Usage in the United States||1400|
|4||Information and Communication Technologies (ICT)||920|
|5||Global Data Centres||298|
|7||Regular Banking System||239|
1. Total Annual Global Energy Consumption
We consume 22,562 terawatt hours of electricity globally per year. – https://en.wikipedia.org/wiki/World_energy_supply_and_consumption#Final_consumption
2. Global Air Conditioner Use
The world uses 2000 terawatt hours of energy annually to cool our houses and businesses. Is all of this energy usage for air conditioners essential? No. Is some of it essential? Yes. Who makes this decision? The same question applies to cryptocurrencies – if you’re an unbanked person in Africa, cryptocurrencies can seem quite essential to you.
“[T]he rise in global energy consumption for space cooling has over tripled in the last three decades from approximately 600 terawatt hours in 1990 to 2,000 terawatt hours in 2016.” – https://climate.org/cooling-your-home-but-warming-the-planet-how-we-can-stop-air-conditioning-from-worsening-climate-change/
3. Residential Energy Usage in the United States
The United States is known as a heavy energy user. Residential energy usage in the United States – 1.4 trillion kilowatt hours [which equals 1400 terawatt hours (TWh)]. – https://www.eia.gov/energyexplained/electricity/use-of-electricity.php
4. Information and Communication Technologies (ICT)
“ICT is understood to cover computer and peripheral equipment including local area networks, telecommunication equipment and networks, and data centers…The footprint of ICT (information and communication technologies) is growing continuously in our lives, in an increasing number of countries. A vivid illustration is the increase in the number of mobile phones in the world (more than 6 billion in 2013), and the increasing use of ICT in sensors and cyber-physical systems that help improve our security and wellbeing…In 2012, ICT usage consumed 4.7 percent of electricity worldwide, amounting to approximately 920 TWh (1 TWh is a terawatt-hour or 1012 watt-hours).” – https://ubiquity.acm.org/article.cfm?id=2755977
5. Global Data Centres
I used an average of the high and low numbers for data centres in the world – 298 TWh.
“Globally, data centers were estimated to use between 196 terawatt hours (TWh) (Masanet et al, 2020) and 400 TWh (Hintemann, 2020) in 2020.” – https://davidmytton.blog/how-much-energy-do-data-centers-use/
6. YouTube Videos
Are YouTube videos a waste of time? Yes? No? It depends?
“[P]eople around the world are now watching a billion hours of YouTube…every single day” – https://blog.youtube/news-and-events/you-know-whats-cool-billion-hours/
“Youtube uses about 243.6 TWh (over 1% of global electricity)”
7. The Regular Banking System
“The four key areas of electricity consumption associated within the broader banking system with enough data to establish acceptable estimates are:
1. banking data centers,
2. bank branches,
4. and card network’s data centers.
The global electricity consumption of the banking system is estimated to be 238.92 TWh/yr.”
8. Bitcoin Mining
“Bitcoin’s direct energy consumption comes from three sources: the nodes that validate and relay transactions, the pools that coordinate miners’ activity across the world, and the mining machines. The overwhelming majority of Bitcoin’s energy consumption comes from operating mining machines, roughly 99.8%….There is no denying that the Bitcoin network consumes a substantial amount of energy, but this energy consumption is what makes the Bitcoin network so robust and secure.”
9. PC Gaming
“Globally, PC gamers use about 75 billion kilowatt hours [75 terawatt hours] of electricity a year” – https://grist.org/article/video-games-consume-more-electricity-than-25-power-plants-can-produce/
There are people in the world who would say that online gaming is a complete waste of energy (I’m not one of them). A billion hours of YouTube watched per day worldwide uses a lot of energy. Our current banking system which is failing billions of people worldwide uses a lot of energy. A handful of giant companies (Amazon, Facebook, and Google) are using a significant percentage of the world’s energy production.
You could argue that we don’t need Bitcoin and cryptocurrencies adding to the energy load on our world, but people who believe in the use cases of Bitcoin and cryptocurrencies think they are absolutely essential to combat the one-way flow of money from us regular folks to the ultra-rich people in the world.
In my next blog I’ll examine the ways Bitcoin is using renewable energy to mine coins.