This is part two in an ongoing series taking a look at the electricity consumption and environmental impact of Bitcoin Mining — Part 1 is available here.
The Digiconomist and their Bitcoin Electricity Consumption Index is one of the oldest and most cited sources in the Bitcoin environmental and energy debate. This single data point makes up the basis for a significant amount, if not the vast majority, of media reports on Bitcoin and its environmental impact.
In part 1, we took Digiconomist’s data and contextualized the data globally and historically. All this information, taken at face value, shows that Bitcoin’s impact on the global climate is essentially about 0.1%. An immaterial number in any context.
In this follow-up we question Digiconomist’s model.
Over the past few weeks and months Bitcoin’s network hash rate has fallen approximately 56% from a high of an estimated 198 EH/s on April 15, 2021 to the current estimate of 88 EH/s on June 30, 2021.
This is largely driven by recent developments in China which have banned almost all Bitcoin mining activity in the country in stages. All major metrics are down in this same time period.
Given the measurable and meaningful reduction in all these key data points, hash rate, difficulty and price/mining profit we would expect that Bitcoin’s estimated electricity consumption and estimated emissions would also fall as a result.
Digiconomist is actually showing the complete opposite of that. Consistently increasing power consumption and emissions figures.
Looking at the Digiconomist’s Methodology, this model is based entirely on mining profitability measured per hash rate and the given cost of bitcoin per day.
According to this cited methodology, we would expect that over the same time period, all things being equal, Digiconomist would show a commensurate 73% approximate reduction in estimated electricity consumption and emissions, to match the 73% reduction in Bitcoin mining revenue, or the 55% reduction in…