How much energy does Bitcoin consume?

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How much energy does Bitcoin consume? Does Bitcoin mining impact the global fossil fuel-based energy crisis today? In this article, Liquid has decided to answer some of the critical questions you might have about Bitcoin energy consumption. But first, we need to understand why Bitcoin consumes energy.

Why Does Bitcoin Consume Energy?

Bitcoin network has its fault-tolerant proof of work (POW) consensus mechanism that requires Bitcoin miners to solve complex mathematical puzzles to add more Bitcoins to circulation. On the other hand, validators verify all Bitcoin transactions for their authenticity.

All Bitcoin network processes, including Bitcoin mining and transaction validation, require considerable CPU and GPU resources. However, there is a significant difference between these two processes as far as energy consumption is concerned.

Validating Bitcoin transactions is not as energy-intensive as mining Bitcoin. Once a Bitcoin is mined, energy requirements take a drastic nosedive.

Bitcoin miners and transaction validators are rewarded to mine Bitcoin and validate transactions, respectively. Therefore, Bitcoin's popularity has continued to increase over a period, causing a hike in energy consumption naturally.

How Much Energy Bitcoin Consumes?

Renewable energy sources like hydro and solar can be used without increasing the risks of carbon emissions.

As opposed to that, non-renewable energy sources such as coal and other fossil fuels increase the dangers of carbon emissions.

As a result, Bitcoin mining using electricity derived from fossil fuels leads to more carbon emissions. 

The Bitcoin Mining Network report from 2019 claims 73% of Bitcoin's energy consumption was carbon neutral. It means only 27% of mining facilities used the electricity derived from fossil fuels and other non-renewable energy sources.

According to the University of Cambridge's Bitcoin Electricity Consumption Index, Bitcoin consumes around 110 terawatts per hour (TWh) every year.

Not all Bitcoin mining relies on fossil fuels. Instead, Bitcoin miners around the world use both renewable and non-renewable energy sources for mining Bitcoins.

Many Bitcoin miners also use electricity made from renewable sources like hydro and solar. These nature-friendly crypto initiatives help reduce carbon emissions to a significant extent.

Bitcoin Vs. ‘Others’

How about comparing Bitcoin energy consumption to its traditional counterparts, just to put things into perspective?

Unlike Bitcoin, traditional banking infrastructure tends to rely more on non-renewable energy sources such as coal and other fossil fuels.

The Galaxy Digital study claims that Bitcoin uses less energy than traditional banking. According to the study, Bitcoin's energy consumption is less than half that of the traditional banking system's 263.72 terawatts per hour and gold mining's 240.61 terawatts per hour.

Bitcoin mining can be flexible and energy-efficient compared to traditional banking since some mining facilities use surplus hydroelectricity produced from hydropower.

Traditional banking does not have the same mobility or flexibility that Bitcoin can offer.

Looking at the bigger picture

Some Bitcoin miners are finding shifting to carbon-neutral sources such as electricity created by flared natural gas effective.

Studies suggest that flared natural gas alone can power the Bitcoin network. So, it could be a reason for manufacturers to start focusing on flared gas as a source of energy.

The incentives from Bitcoin mining can be used to attract more organizations to this trend.

If we look at the bigger picture, a shift to carbon-neutral sources could pave the way for re-investing Bitcoin mining rewards in renewable energy research and development.

The increase in Bitcoin mining could also encourage and incentivize the transition to carbon-neutral energy sources.

If Bitcoin indeed follows Ethereum and moves to Proof-of-Stake (PoS) consensus mechanism, it will speed up Bitcoin transactions and help reduce energy consumption.

Unlike PoW, PoS systems do not incentivize extreme amounts of energy consumption. So, there is a tradeoff between incentivizing energy consumption and achieving energy efficiency through PoS systems. It cannot possibly be both at the moment.

Tesla CEO Elon Musk has also promised to resume allowing Bitcoin transactions if miners use 50% clean energy. Shifting to carbon-neutral sources for mining could also help increase mainstream adoption of Bitcoin in the near future.


To sum up, Bitcoin mining is more or less carbon-neutral. However, there is room for improvement in transitioning to renewable energy sources in the near future. Moreover, we hope the lucrative profits from Bitcoin mining help incentivize and speed up that shift.

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