There have been many claims in recent years that bitcoin and the miners securing the network via SHA-256 proof of work use an unconscionable amount of energy. But what data are these claims based on, are the source calculations using flawed or sound approaches and assumptions? How much electrical power does the network draw and how much electrical energy has the Bitcoin network used historically?
Methodologies And Misconceptions
Due to the vast, globally distributed topology of the Bitcoin network, the amount of electrical power and energy that miners consume isn’t exactly verifiable, instead it must be estimated. Among the energy consumption hysteria over the previous few years, a surprisingly large number of reputable sources have weighed in and attempted to estimate Bitcoin’s network energy consumption in more level-headed and data-derived ways:
Estimation methodologies seem to fall into two major categories: economics-based approaches rooted in financial assumptions, as well as physics-based approaches planted in engineering principles. These two estimation approaches were thoroughly compared and contrasted at BTC2019.
It’s important to understand when digesting all of these yearly usage estimations that electrical consumption is typically measured in two ways: instantaneously (power, watts, kilowatts, etc.) and that same instantaneous power measurement integrated over time (energy, joules, kilowatt-hours (kWh), etc.)
The Problems With Economics-Based Network Energy Estimations
Economics–based approaches that estimate the Bitcoin network energy consumption generally assume perfectly rational market behavior, and can easily be manipulated with a few input variable misassumptions.