Bitcoin miners will guzzle more electricity this year than some countries do, according to new numbers from a leading researcher. And while some critics take issue with these figures, few disagree that the digital currency’s energy use is a problem that’s only getting bigger.
Economist Alex de Vries studies bitcoin and other cryptocurrencies, which were invented in 2008 by an anonymous computer programmer. Bitcoin allows people to buy and sell things directly from each other without the use of intermediaries, like banks or currencies controlled and manipulated by governments.
Bitcoins are exchanged along a public digital ledger, known as a blockchain, where every move is tracked and verified by computers doing complex mathematical calculations, called hashes. Those willing to lend a hand in verifying the transactions and building the blockchain are rewarded with bitcoins.
If it sounds complicated, that’s because it is. It’s also hard work.
De Vries estimates that globally, computers on the bitcoin network are currently crunching 26 quintillion hashes — that’s 26,000,000,000,000,000,000,000,000,000,000 — every second of every day.
It takes quite a bit of computational power to pull that off, and de Vries is among those taking a stab at figuring out just how much energy is used in conducting all that work, publishing his latest survey — the first peer-reviewed research on the topic — in the scientific energy journal Joule.
By his math, computers hashing for bitcoins — known as “miners” — are currently using at least 2.5 gigawatts of power per year, and are on track to collectively suck up more than three times that by the end of this year. That’s more than Ireland, Austria, the Czech Republic, the Netherlands and most Canadian provinces each use in a year.
‘It is growing fast’
De Vries also estimates the industry’s voracious appetite for juice has doubled in the past six months, possibly due to new interest in bitcoin — their price spiked to just under $20,000 each at the end of last year — but also because energy-consumption growth is baked in: the supply of undiscovered bitcoins is dwindling so it takes more work to find those left.
In the early days, it was comparatively easy to find a bitcoin, as there were fewer miners competing for the work. Mining could be done by hobbyists using personal computers. But as the digital currency’s popularity — and value — has skyrocketed, the increased complexity of the blockchain requires more energy and computing power to solve equations, and now there’s specialized computing farms mining for bitcoin.
By de Vries’ math, a single bitcoin transaction uses as much electricity as a typical Canadian home would consume in a month — and there are 200,000 transactions being processed each day.
“Bitcoin has a big problem,” de Vries wrote. “And it is growing fast.”
But de Vries’ numbers and methodology are not without their critics. The economist comes up with his estimates by assuming most large-scale miners are using the most energy-efficient devices possible, then factors in how many machines are known to be in use and the cost of electricity where these machines are known to be clustered.
He admits he’s taking educated guesses, partly because many bitcoin miners operate in relative secrecy.
Stanford University lecturer Jonathan Koomey says de Vries’ work makes far too many leaps of logic, which results in assumptions that are likely wildly out of step with reality.
“We know there’s a lot of electricity used and we know there’s rapid growth,” Koomey said in an interview. “But nobody has been in these facilities and we don’t have information on the servers themselves.”
The 800-pound gorilla of the bitcoin world is a Chinese company called Bitmain, which has huge operations in Mongolia and remote parts of China. Bitmain is a fascinating player as the company both mines for bitcoin itself, but also sells mining equipment to others.
Their most efficient model, known as an Antminer S9, has the computational power of about a half-million PlayStation 3 gaming consoles, but uses as much wattage as a dishwasher in the process, according to de Vries.
It’s not hard to imagine how 20,000 of those devices — as one of Bitmain’s locations in Mongolia is believed to have — would net an eye-watering electricity bill.
It’s also not hard to understand why many of the largest mining facilities are set up in cold-weather places with a steady supply of cheap power, such as Manitoba,Quebec and Iceland. “Rational agents would undertake mining while the marginal costs are lower,” de Vries said.
We still don’t know exactly how much power they’re using or how much they pay for it.
De Vries admits his work is only meant to be a starting off point for future research. “I think everyone agrees on the minimum energy consumption. But the future estimate? That’s actually quite debatable,” he said.
“We don’t really have a common approach to getting to a future estimate of electricity consumption right now, which is why I am hoping to get this conversation started.”
But Koomey argues it’s classic scaremongering to worry about the electricity use of new technologies. Twenty years ago, he recalls that the media was full of stories about how internet usage was growing too rapidly, and reportedly destined to consume as much as half of all electricity in the world.
“I’ve seen this happen over and over,” said Koomey. “That was bunk, [so] people shouldn’t jump to conclusions.”
“To be clear, [bitcoin mining] is a big user of electricity and growing rapidly,” he said. “But we need to be careful to not to overhype the problem.”
Koomey said he puts more stead in the work of Marc Bevand, another researcher who suggests de Vries is overestimating bitcoin’s power consumption, possibly by twice as much. (Bevand has published a detailed criticism of de Vries’ work online.)
‘Digital versions of Beanie Babies’
Regardless of the electrical toll, some argue any amount of time and effort that is going into the mining of bitcoin is a fruitless folly.
Andreas Park, a finance professor at the University of Toronto, likens the digital currency to a major fad of the 1990s.
“Bitcoin, such as it is, has little-to-no use. So we are effectively using our planet’s resources to secure people’s digital versions of Beanie Babies,” he told CBC News in an email.
“I am a fan of decentralization and blockchains, but I sincerely hope that we find mathematically and economically sound alternative approaches soon that replace this waste of resources.”