Bitcoin Energy Comparison: Debating Environmental Impact

Bitcoin Energy Comparison: Debating Environmental Impact

Dean Decho February 24, 2023
8 min read

One of the most pressing concerns surrounding this revolutionary currency is its energy consumption. The process of mining Bitcoin requires vast amounts of electricity, leading some to question whether the environmental impact of this cryptocurrency is worth the benefits it offers. As we dive into this topic, it’s crucial to consider the costs, not just the benefits, of this new financial landscape. In this article, we’ll explore the energy consumption of Bitcoin, debate its environmental impact, and discuss potential solutions for a more sustainable future.

The environmental impact of Bitcoin has sparked heated debates among experts and enthusiasts alike. Our Bitcoin energy comparison seeks to explore these concerns, examining the energy consumption of the cryptocurrency and its implications on the environment. We’ll delve into the factors driving Bitcoin’s energy use, compare it to traditional financial systems, and discuss potential solutions for a more sustainable future.

Bitcoin’s Energy Consumption

bitcoin energy grids

How Bitcoin mining works

First, it is important to understand how Bitcoin mining works.

At its core, mining is the process of solving complex mathematical problems to validate transactions and create new Bitcoins. Miners use powerful computers to compete with each other to solve these problems, and the first one to find the solution is rewarded with newly minted Bitcoins. This process is called Proof of Work (PoW), and it’s the backbone of the entire Bitcoin network.

However, as the number of miners and the complexity of these problems have increased, so too has the computational power required to mine new Bitcoins. Consequently, the energy consumption associated with mining has skyrocketed, raising concerns about its environmental impact.

In the Bitcoin network, miners play a key role in verifying and recording transactions on the blockchain. In exchange for their work, miners are rewarded with new Bitcoins. The process of mining new Bitcoins involves solving complex mathematical problems that require a significant amount of computing power.

Factors influencing energy consumption

Several factors influence the energy consumption of mining, such as the efficiency of mining hardware, the cost of electricity, and the availability of renewable energy sources. As competition among miners intensifies, they’re compelled to invest in more powerful and energy-efficient hardware, which in turn becomes energy demand and increases the overall energy usage.

Additionally, since electricity costs vary globally, mining operations often seek out locations with lower energy prices to maximize their profits. This has led to a geographical concentration of mining facilities in areas with cheap electricity, such as China, where coal-fired power plants still dominate the energy landscape. Consequently, the energy sources used for mining play a crucial role in determining the overall environmental impact of Bitcoin miners.

Bitcoin Miners: Consumption in numbers

According to the Cambridge Bitcoin Electricity Consumption Index (CBECI), the total energy consumption of the Bitcoin network is currently estimated to be around 70 terawatt hours (TWh) per year. This is roughly equivalent to the annual energy consumption of a country like Chile or Austria.

A study published by the University of Cambridge in 2020 estimated that the global banking industry consumes around 263 TWh of energy per year. This includes the electricity consumed and energy used to power bank branches, data centres and other infrastructure.

In the following graph, see the history of power demand on the bitcoin network, according to the study.

historical bitcoin network power demand

However, it is important to note that these estimates are not directly comparable as they measure different things. Bitcoin’s energy consumption is primarily determined by the energy required to power mining operations and Bitcoin node maintenance, while the banking industry’s energy consumption, for example, is determined by a variety of factors including building energy use, data center energy use, and ATM operations.

In this graph, you can see the exact electricity consumption in terawatt-hours of the bitcoin network for each year from 2017 to 2023.

total bitcoin electricity consumption

However, some analysts suggest that Bitcoin’s energy consumption is disproportionately high compared to its transaction volume and market capitalization. In contrast, traditional banking may be more energy efficient due to economies of scale and a significantly more centralized infrastructure.

Comparing Bitcoin energy usage to other industries

When evaluating the energy consumption of Bitcoin, it’s essential to put it into perspective by comparing it to other industries. For instance, Bitcoin’s energy usage has been compared to that of entire countries, like Ireland or Switzerland. While these comparisons can be eye-opening, it’s important to remember that Bitcoin offers a global financial infrastructure and has the potential to disrupt traditional banking systems, which also consume significant amounts of energy.

Furthermore, it’s worth noting that other industries, such as gold mining and the production of paper money, have their own environmental impacts. While it’s difficult to make direct comparisons, it’s crucial to weigh the potential benefits of a decentralized financial system against the costs associated with its energy consumption.

Sources of energy used for extraction

bitcoin consumes electricity

The energy sources used to mine Bitcoin vary depending on the location of the mining facilities.

In China, where much of the mining took place before it was banned, coal was the main source of energy consumed. In other countries, such as Iceland and Sweden, mining facilities often use renewable energy sources such as hydroelectric and geothermal power.

Fossil fuels

Coal, natural gas and other fossil fuels are commonly used to power mining, especially in regions where energy is cheap and abundant. However, the use of those fuels is highly questionable due to their contribution to greenhouse gas emissions and climate change.

According to a study published in the scientific journal Joule in 2019, around 74.1% of bitcoin mining is powered by green energy sources, while the remaining 25.9% of bitcoin miners is powered by fossil fuels such as coal and natural gas.


Hydropower is a common source of energy, especially in areas with abundant water resources, such as Iceland. Hydropower is considered a relatively clean source of energy, although it can have negative impacts on the environment, aquatic ecosystems and local communities.

It is estimated that hydropower accounts for about 60% of the energy used, making it the most common renewable energy source used for mining.

Solar energy

Solar energy is an increasingly popular energy source for mining bitcoins, especially in regions with high levels of sunshine. Solar energy is also a clean source of energy, although it can be expensive to install and maintain.

Solar energy is estimated to account for about 5% of the energy used to mine bitcoins. Although still a relatively small percentage, solar energy is becoming more popular as the cost of solar panels continues to decrease.

Wind power

Wind power is another green energy source that is used to mine bitcoins in some regions. Like solar power, wind power is clean and renewable but can be expensive to install and maintain.

It is estimated that wind energy accounts for about 6% of the green energy used to mine bitcoins. Like solar power, wind power is becoming more popular as the cost of wind turbines decreases.

Geothermal energy

Geothermal energy is source of electrical energy that is used to mine bitcoins in some regions. Geothermal energy is generated by harnessing the Earth’s natural heat, which can be used to power steam turbines and generate electricity.

Geothermal energy is estimated to account for about 1% of the energy used to mine bitcoins. Although a small percentage, geothermal energy is a promising source of renewable energy for mining in regions with geothermal resources.

The high energy consumption has led to concerns about its environmental impact. The carbon footprint of bitcoin mining is significant, as burning fossil fuels to generate electricity releases greenhouse gases into the atmosphere. In addition to contributing to climate change, the use of fossil fuels for bitcoin mining can have local environmental impacts, such as air and water pollution.

There are several ways in which the energy consumption and environmental impact of mining can be reduced. In some cases, mining facilities have already switched to renewable energy sources, which can significantly reduce their own carbon emissions footprint.

Another solution is to improve the efficiency of mining hardware and techniques, which can reduce the amount of energy needed to mine bitcoins. Finally, some have called for regulation of bitcoin mining to address the industry’s environmental impact.

Get more valuable insights on Bitcoin by checking out our articles on Bitcoin Investment Opportunities, and Bitcoin Price Predictions.

Arguments FOR Bitcoin’s Environmental Impact

Decentralized finance and reduced reliance on banks

One of the key benefits of Bitcoin is its potential to transform the financial landscape by offering a decentralized and secure alternative to traditional banking systems. With reduced reliance on banks and traditional banking system, we could see lower transaction fees, faster money transfers, and increased financial access for those who are underbanked or unbanked. By creating a more efficient and inclusive financial ecosystem, Bitcoin may ultimately help reduce the environmental footprint of the broader banking sector.

Encouraging the development of renewable energy sources

As concerns about Bitcoin’s energy consumption grow, there’s increasing pressure on the mining industry to adopt cleaner energy sources. In response, many mining operations have begun transitioning to green energy sources like solar, wind, and hydropower. This shift not only helps reduce global Bitcoin mining’s carbon footprint but also drives investment and innovation in the clean energy sector, contributing to a greener, more sustainable future.

Supporting local economies in mining regions

The mining operations can bring economic benefits to local communities by creating jobs and boosting the demand for goods and services. In some cases, mining facilities are established in regions with abundant, underutilized green energy resources, such as hydroelectric power. By tapping into these resources, mining operations can foster economic development and improve the quality of life for local residents.

Arguments AGAINST Bitcoin’s Environmental Impact

Unsustainable energy consumption

Despite the potential benefits of Bitcoin, its current energy consumption levels remain a significant concern. With the increasing computational power required for mining, the energy demands of the Bitcoin network continue to rise, potentially exacerbating climate change and straining energy grids. Critics argue that the environmental costs of the energy intensive BTC mining outweigh its potential benefits, calling for a reevaluation of its sustainability.

Environmental degradation due to mining activities

In addition to high energy consumption, global Bitcoin mining operations can contribute to environmental degradation through the production of electronic waste and the consumption of water resources. The constant need for more powerful hardware leads to a rapid turnover of mining equipment, generating electronic waste that can be harmful if not disposed of properly. Furthermore, some mining facilities require substantial amounts of water for cooling purposes, which can strain local water resources and impact surrounding ecosystems.

The centralization of mining power

Although Bitcoin was initially conceived as a decentralized currency, the increasing concentration of mining operations in certain regions has raised concerns about centralization. This centralization can lead to a higher risk of market manipulation, reduced network security, and decreased accessibility for smaller-scale miners. Critics argue that the centralization of mining power contradicts the fundamental principles of Bitcoin and undermines its potential benefits.

As we consider the arguments for and against Bitcoin’s environmental impact, it’s crucial to weigh the potential benefits of a decentralized financial system against the costs associated with its energy consumption. By understanding the complexities surrounding Bitcoin’s sustainability, we can work towards developing innovative solutions that strike a balance between financial innovation and environmental responsibility.

Conclusion about the Bitcoin Energy Debate

In conclusion, the energy consumption and environmental impact of bitcoin mining are important issues that need to be addressed. While there are potential solutions, it is important that the Bitcoin community and policymakers take action to ensure the sustainability of the network.

Compare different options with our guides on the Best Bitcoin Exchanges and Recommended Trading Platforms for Bitcoin.


Dean Decho

Dean is a passionate advocate for the financial freedom and independence offered by Bitcoin and the cryptocurrency space. He's built this crypto learning platform to help others in the industry learn, grow and be part of it.