Bitcoin’s Energy Footprint (2023)

As the world pivots toward digital assets, Bitcoin, a trailblazer in the realm of cryptocurrencies, has come under scrutiny for its environmental footprint. Delving into the metrics reveals intricate details about its energy consumption. This article offers an all-encompassing perspective on the energy expenditure for each Bitcoin transaction, the ensuing carbon emissions, and the security cost for the network.

1. Miner Efficiency and Energy Consumption

Miner Specifications:

• Model: BITMAIN ANTMINER S19J Pro
• Hashrate: 104 TH/s
• Power Consumption: 3,068 Watts (or 3.068 kW)
• Power Efficiency: 29.5 J/TH

Given the current Bitcoin network hashrate of 436.86M TH/s:

Units of BITMAIN ANTMINER S19J Pro required = 436.86 million TH/s / 104 TH/s/unit = Approximately 4.2 million units

Thus, the entire network’s energy consumption using this miner model = 4.2 million x 3.068 kW = 12,885,600 kW or 12,885.6 MW.

2. Bitcoin Network’s Annual Energy Expenditure

The yearly energy usage is calculated as: 12,885.6 MW x 24 hours/day x 365 days/year = 112,986,816 MWh/year

3. Theoretical Transactional Throughput and Energy Consumption Per Transaction

Bitcoin’s protocol has a block time of approximately 10 minutes and a block can include around 2,500 transactions, leading to:

Transactions per hour = 6 x 2,500 = 15,000 Transactions per year = 15,000 x 24 x 365 = 131,400,000 transactions/year

Given the network’s annual energy consumption: Energy per transaction = 112,986,816 MWh/year / 131.4 million transactions/year = 0.86 MWh/transaction or 860 kWh/transaction.

4. Estimating Carbon Emissions

Factoring in the energy sources, with an assumption that 40% is renewable and 60% non-renewable (with an average emission factor of 500 gCO2/kWh):

Emissions = 0.60 x 860 kWh x 500 gCO2/kWh = 258,000 gCO2 or 258 kgCO2/transaction

5. Network Security’s Price Tag

Bitcoin’s network security is inherently tied to its energy consumption. The remuneration in Bitcoin for miners both incentivizes and fortifies the network’s security. Taking into account the current Bitcoin value and yearly electricity expenditure (using an average global electricity rate of $0.05/kWh):

Security cost per transaction = 860 kWh x $0.05 = $43/transaction

6. Assessing the Security Footprint of the U.S. Dollar

For a holistic comparison, it is crucial to understand the vast infrastructure supporting the U.S. dollar, the predominant global reserve currency.

U.S. DoD Budget Analysis: The U.S. Department of Defense (DoD) had a projected budget of approximately $753 billion for 2022. Although it’s an oversimplification to ascribe the entirety of this budget to the defense of the U.S. dollar, it provides a foundational benchmark for the financial commitments underpinning its security.

Energy Expenditure and Carbon Emissions: At an average oil price of $70 per barrel, the DoD’s budget translates into a potential consumption of approximately 10.76 billion barrels. The resultant CO2 emissions from the combustion of this quantity reach an estimated 4.6 billion metric tons. In direct contrast, Bitcoin’s annual energy consumption, responsible for its entire security infrastructure, is about 112,986,816 MWh/year, leading to carbon emissions around 67.792 million metric tons (considering the 60% non-renewable source calculation). This means the carbon footprint attributed to the protection of the U.S. dollar is roughly 68 times greater than that of Bitcoin’s yearly operations. Such a stark disparity underscores the disproportionate environmental impact of traditional security structures compared to decentralized digital assets.

7. Comparative Analysis: Bitcoin vs. U.S. Dollar

• Monetary Security Expenditure: A Bitcoin transaction incurs an energy-associated cost approximating $43. Juxtaposing this with the colossal budget of the U.S. DoD showcases the asymmetric financial infrastructures undergirding each system.

• Environmental Considerations: Bitcoin’s adoption trajectory is veering towards sustainable energy practices, with its carbon cost per transaction being 258 kgCO2. The vast energy consumption tied to the U.S. DoD, predominantly fossil fuel-based, has a profoundly more significant environmental impact.

8. Bitcoin: Charting the Course Towards Sustainability

The architectural ethos of Bitcoin is pushing it inexorably towards sustainable energy. Its decentralized topology combined with market-driven incentives ensures miners are incentivized to seek the most cost-effective energy solutions. As the cost dynamics favor renewable sources, their adoption among the mining community intensifies.

Potential for Renewable Energy Proliferation: Bitcoin, by virtue of its inherent economic constructs, might not only ameliorate its carbon footprint but could serve as a catalyst for the wider adoption of renewable energy infrastructure.

Inference:

A nuanced examination of financial systems requires an expansive view, not confined to mere immediate quantifiable metrics. The evolutionary trajectory these systems embark upon is equally, if not more, critical. Bitcoin, notwithstanding its contemporary environmental challenges, is manifesting a clear vector towards eco-friendly practices. Traditional fiduciary systems, in contrast, exhibit a more stagnant environmental footprint. In an era demanding sustainable solutions, the adaptability and forward momentum of decentralized networks like Bitcoin underscore its potential significance in the broader financial landscape.

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