Evaluating estimates of Bitcoin electricity use
Untangling an increasingly important question
Bitcoin and similar proof-of-work cryptocurrencies use electricity to secure their networks. All over the world, data centers are humming away, performing the calculations needed to provide that security. Those computers need electricity, and a often-asked question now is “how much?”
There have been several attempts to quantify the amount of electricity consumed in securing the Bitcoin network. Unfortunately, this is an opaque area with very few data available, which means researchers must make assumptions to fill in gaps in their estimates. This can lead to alarming headlines like, “Bitcoin Mining on Track to Consume All of the World’s Energy by 2020.”
Relying on bad data is a sure-fire way to end up with bad policy. As an advocate for sound policy making on public blockchain technology issues, Coin Center has an interest in promoting the availability of credible estimates of the energy use by Bitcoin and other proof-of-work blockchains. Not being experts ourselves, but feeling that something was a little off about the prediction that Bitcoin would use all of the energy in the world next year, we asked Dr. Jonathan Koomey to help us understand the strengths and shortcomings of the various Bitcoin electricity consumption estimates out there, and to lay out best practices that analysts should follow in the future when estimating the energy use of public blockchain networks.
Dr. Koomey is one of the world’s leading experts on the electricity use and efficiency of information technology. Years ago he was one of the few dissenting voices during a flurry of doomsday-like predictions about data centers’ energy use during the rise of the internet, which did not end up using nearly as much energy as some predicted. What he found suggests that a similar story may be playing out with Bitcoin today.
In this report, Dr. Koomey lays out:
- The complexities and pitfalls of accurately assessing the amount of electricity used by the Bitcoin network;
- Potential red flags to look for when evaluating estimates of Bitcoin’s electricity use;
- Best practices to follow when estimating the electricity use of rapidly growing information technologies; and,
- The credibility, strengths, and weaknesses of six well-cited estimates of Bitcoin’s electricity use.