Crypto's Energy Consumption: Beyond the Perceptions
By Tim Mandell and Crystal J. Milburn
It’s easy to fall into the trap of “crypto mining eats up a lot of energy” and believe it to be true. Take a look at Tesla’s electric vehicles (EVs), which were presented as and believed to be sustainable alternatives to gas-powered vehicles. Not only are the battery and other components being challenged as greenwashing, but they have chosen not to report Tesla’s specific carbon emissions. Ironic for a company that decided not to transact in Bitcoin (BTC) due to its “great cost to the environment.”
Nonetheless, we’re happy to fight our fight and not the one in front of Elon Musk. Crypto mining energy myths are circulating and we’d like to put them in reverse by answering the question…
Do crypto data centers use too much energy?
Global Data Center Usage = 1%
Before drilling down into cryptocurrency data center usage, we did a little research on global data center usage first. You might pay special attention to this if you shop on Amazon, use Facebook or TikTok, stream your favorite shows or send emails because they all require data centers.
The big tech giants using the most electricity in the U.S. are Amazon, Microsoft, Google, Facebook and Apple, which you probably could have guessed. China also has one company on that list, Alibaba. The pandemic has played a massive role in furthering their collective Big Tech dominance as more employers than ever support remote work, video conferencing and file sharing via cloud services.
While the big 5 (or technically, 6) garner the most attention, it is colocation centers (managed by specialized companies and shared by users) that make up the majority. Increased digitizing and higher regulation have fueled the need for more data and colocation centers in more places. Many businesses, for example, are learning that IT issues are reduced if they turn in their on-site servers in exchange for rented space on cloud servers.
The global electricity usage of all of the above is a whopping 1% and, surprisingly, that figure hasn’t changed in the past 12 years even though the number of internet users has doubled and web traffic has increased 15 times. How? Building innovation, more efficient hardware, colocation efforts (moving small, inefficient systems to larger data centers) and advanced cooling systems such as immersion cooling (stay tuned for the next blog) have managed to offset growing electricity demand.
Cryptocurrency Mining = .15% (Think Holiday Lights)
Check out this chart from the Bitcoin Mining Council that shows global Bitcoin mining power usage similar to that of holiday lights (i.e. extremely low).
This is where we get a little defensive (backed with facts). Bitcoin is the industry leader in sustainability with a 59.5% sustainable energy mix. Further, in comparison to global energy usage, cryptocurrency mining consumes only .15% (or 15 bps) of the world’s energy (165,317 TWh vs. 253 TWh). Their carbon emissions are negligible at .086% (or 9 bps) of the world's CO2 production (34.8 BMt vs. .03 BMt).
Why That Number Will Improve Over Time
And, to the above point that equipment and technology are constantly improving, miners are 58 times more efficient now than they were eight years ago. Mining equipment and energy consumption protocols project mining to be 10 times more efficient in the next eight years. That’s a drastic improvement over what is already low overall energy usage.
Benefits of Bitcoin That Amass the .15%
On the flip side, that low (scant) energy usage packs a substantial punch. Bitcoin offers benefits such as protecting human rights, providing critical currency stability, enabling intra- and intercountry business commerce, supporting low-cost remittances and offering people in developing nations agency and ownership over their financial lives. Not the rap sheet some make it out to be, eh?
Seems Negligible; Where Did the Fallacy Originate?
Perhaps from Elon Musk! But seriously, there could be several explanations for it. The news has to news, naysayers will always exist and the fact that crypto mining facilities need electricity to run your miners and keep them cool could explain things. If you have ever been in one, it’s a full sensory experience; you can feel, hear, smell and practically see the energy. It’s a unique experience and it’s easy to jump to conclusions. That’s why math is important, contrary to what you thought in 5th grade.
In Summary
What we’re seeing:
There is an increase in large-scale demand which uses power more efficiently and cheaply
Renewable-, energy-conscious consumers do their part to bring energy usage down
Technology advances are driving increased production with less consumption
More opportunities to give or sell power back to the grid
What we’re doing:
Using renewable energy first
Aligning with and/or building facilities where renewable energy is abundant
Understanding that capital costs for renewable energy increase operation costs
Giving back to the grid
Economic curtailment programs
Load response
Demand response
Exploring opportunities to repurpose abandoned energy sources
We hope this helps “curtail” your thoughts and concerns with crypto and crypto mining energy consumption and we forgive you for doubting our industry! Kidding aside, we appreciate you and that you care about these things - we do, too. Give us a call to discuss your large-scale crypto mining needs.
