Bitcoin: More electricity consumption than the entire planet?

Why Bitcoin won’t result in the complete collapse of society, but might result in an energy revolution

Brett King

If you believe the hype, not only are bitcoin miners using more electricity than a number of small countries, but within just two years, Bitcoin is expected to take the world’s entire energy supply to continue its mining activities.

Here are some of the more outlandish claims surrounding Bitcoin’s energy use:

• Bitcoin is destroying the planet

• Bitcoin consumers more energy than 159 countries

• One Bitcoin transaction now uses more energy than your house in a week

• “Bitcoin mining on track to consume all of the world’s energy by 2020”

Let’s think about that. Are we to believe that in just two years, all airports, telecoms, railways, hospitals, schools, and the internet will shut down globally in favor of bitcoin mining farms? Is that what you’re honestly telling me is going to happen? No, I’m sorry. That’s just crazy talk, or clickbait — whichever you prefer.

Bitcoin IS most certainly energy intensive

First of all, if you need a primer on how bitcoin mining works, the Economist ran a solid piece on this back in 2015 — “How Bitcoin Mining works” via The Economist

Probably the best article I read on this disinformation and difficulties in estimating Bitcoin energy usage for mining, came from a recent Wired article:

“There are plenty of other estimates, but the key point is they’re all very different. The real range is probably somewhere between 100MW to 3.4GW. That’s like guessing someone’s age as between 15 and 65, while admitting there’s a margin of error of ten years.” — Wired UK: “How much energy does bitcoin mining really use? It’s complicated”, 2nd December, 2017

That sounds like a pretty wide margin of error. So, why is it so difficult to estimate energy usage?

If there was only one computer mining Bitcoin, it would be fairly simple to estimate the amount of energy that is used to transmute coal/gas/renewable energy into a single bitcoin. But that’s not the way it works. To mine a bitcoin you need to solve an increasingly complex mathematics problem built into the Bitcoin code base — solving the crypto-math problem results in a reward of a Bitcoin block (25 Bitcoins) on the blockchain. Solving the math problem requires specialized GPUs (Graphic Processing Units) number crunching for hours at a time. In fact, a fairly typical computer with an average type of GPU isn’t going to cut it — a recent estimate was that to mine a single Bitcoin using an average computer would take you around 1,367 years (see

Part of the problem is, that all those Bitcoin miners are racing to solve the same problem, but only the miner who solves the problem first gets to actually claim the block. All the other miners lose out, and their energy goes to waste. Even with that probability, with 1 Bitcoin at roughly US$20,000, there’s plenty of incentive to try.

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The largest Bitcoin Mining Farm in Russia — source:

The farm above in Russia produces about 600 Bitcoin’s per month, on an energy bill of approximately US$100,000. That’s about $12 million return, in today’s terms, for $100,000 of energy cost. Obviously there’s hardware and people costs to take into account, but even on that basis the returns are phenomenal.

The largest mines in China consume $40,000 per day in energy, and have located in remote parts of China setting up as close to generation facilities as possible (source: Quartz article). This one mine in Ordos, Inner Mongolia alone accounted for about 4% of all Bitcoin daily mining as of August 2017. China recently banned bitcoin mining activity (see, but my guess is that these farms won’t just close up shop willingly with incentives so high.

Should we ban Bitcoin mining?

Nah, that ain’t going to happen. However, at some point the excess capacity for the current energy grid will be all taken up, and miners will be told that they’re consuming as much energy as the grid can give them. At that point, either miners max out on their Bitcoin production capability, or they start investing in their own generation capability. If they do, I can guarantee you they won’t be building coal fired generation plants.

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In Ramez Naam’s talk on Exponential Energy, it’s stuff like Bitcoin mining, climate change, increasing use of autonomous vehicles, fleets of robots and drones, etc., that are all going to drive down the cost of renewable-based electricity production. Today, coal-fired plants in the US and China cost between 7–14c/KwH (subsidized), whereas Mexico and the Middle East are already booking long-term solar contracts at 1c/KwH (unsubsidized). Naam makes the point that enough sunlight hits the Earth every 10 seconds to satisfy the world’s entire energy needs for that day, or over an hour we’d be able to meet the world’s energy needs for a year — if only we could efficiently utilize it.

That’s where solar and Bitcoin are obvious bedfellows. The cost of deploying solar farms that mine crypto-currencies (or crypto-assets) with an increasing robust crypto-exchange market, is still going to be fractional compared with the return. There’s a really strong argument that solar-based Bitcoin mines could be much more viable on a medium-term basis.

There’s more than enough energy coming from the sun to mine all the Bitcoins we need — if only we change our view of energy.

There is abundant energy available for whatever needs we might have if you deploy solar.

Smart Economies will be based on new energy and capital markets

The economies of 2020 will compete based on quantum computing power, digital assets and commodities, artificial intelligence, automated value chains and new exchange mechanisms. As I’m writing this today, Donald Trump is using the derailment of an Amtrak train to push his agenda for rebuilding the US’ own dramatically aging infrastructure to compete with China, Russia and others. The fact is, that solar and crypto-currencies are both elements of a new type of economic advantage. The ability for markets to operate in real-time over a new infrastructure built for the digital age.

Coal, Gas and 180 million utility poles in the US today are not the foundations for a smart economy. China, on the other hand, is racing to deploy solar much faster than anticipated — 43 Gigawatts of capacity in the first 9 months of 2017 alone, with expectations of closer to 60 Gigawatts by year end. That’s more than the entire US solar install base superseded in one year.

If the forces of Solar and Bitcoin align, it could very well redefine the way we think of underlying market growth powering the economy. With energy making up a substantial element of global commodities trading, the clear shift towards renewable sources of energy production over the next 20 years means that markets will go searching for stronger growth and returns. Solar and crypto offer those opportunities.

Whichever way you look at it, Bitcoin mining has to go the way of solar fast, or it will cap out based on available energy. The only way to build enough capacity to power the crypto mines of 2020 is for miners to build renewable energy production facilities. That solar capacity won’t consume fossil fuels, won’t create CO2 and will be reusable for generations to come.