An indispensable process for verifying and adding transactions to blockchains—which act as distributed ledgers supporting cryptocurrencies like Bitcoin—is crypto mining. Not only guarantees the security and openness of these systems, but mining helps to generate new coins. However, the major energy consumption of crypto mining has drawn a lot of criticism since it raises general questions regarding its environmental effect and sustainability. The energy consumption of crypto mining and its consequences for our lives are investigated in this rational manner in this blog.

How Much Energy Does Mining Crypto Use?

Different cryptocurrencies call for various amounts of energy needed for mining them. With peak usage hitting 380 terawatt-hours (TWh), the Cambridge Bitcoin Electricity Consumption Index (CBECI) from the Cambridge Centre for Alternative Finance (CCAF) estimates Bitcoin's annual consumption to be 178 TWh. This amount varies with changes in the Bitcoin network hashrate and is similar to the energy consumption of mid-sized nations like Argentina. Before switching to Proof-of- Stake (PoS), Ethereum's energy consumption was roughly 112 TWh yearly; smaller cryptocurrencies like Dogecoin and Litecoin use far less. Variations in these depend on things like hardware efficiency, mining difficulty, and network hashrate.

Is Crypto Mining a Waste of Energy?

Views on the energy consumption in crypto mining are quite divisive. Critics contend that the energy consumption of mining is wasteful, particularly when its main purpose is to fund financial activities. With an average of 300,000 daily transactions and an annual energy consumption estimated at 130 TWh, Bitcoin consumes almost 1,200,000 kWh every transaction, claims CBECI. A single Visa purchase uses merely 0.4 kWh by comparison.

Advocates argue that Bitcoin's energy consumption supports a worldwide distributed financial system providing inclusive financial services and more effective cross-border payments. Additionally, they demonstrate the increased reliance on renewable energy in Bitcoin mining. In 2021, the Bitcoin Mining Council (BMC) claimed that around 56% of the global Bitcoin mining industry’s electricity originates from sustainable sources. However, this data has been questioned, with critics identifying apparent shortcomings in BMC’s sampling and methodology.

Why is Crypto Mining So Energy Intensive?

The high energy consumption of crypto mining derives from the Proof-of-Work (PoW) consensus mechanism, which remains dominant despite the creation of several cryptocurrencies. PoW involves miners competing to solve complicated mathematical riddles, requiring significant processing power.

1. Hardware Efficiency: Mining largely relies on Application-Specific Integrated Circuits (ASICs), which consume significantly more energy than standard GPUs.
2. Increasing Difficulty: As more miners join the network, the mining difficulty climbs, needing even more processing resources.
3. Continuous Operation: Miners run their rigs 24/7 to maximize profitability, driving persistent high energy consumption. Additionally, mechanisms like Bitcoin’s halving and continuing hardware upgrades significantly heighten energy use.

How Much Power is Consumed in Mining?

With an efficiency ratio of 16.5 J/T and a present network hashrate of 753 EH/s for Seaminer A2, these calculations help one to project the energy needed to mine one Bitcoin:

• Total Energy Consumption (J):
  Total Energy (J)=Total Hashrate (H/s)×Efficiency (J/H)×Seconds Per YearTotal Energy (J)=Total Hashrate (H/s)×Efficiency (J/H)×Seconds Per Year
• Energy Per Bitcoin (kWh):
  Energy per BTC (kWh)=Total Energy (kWh)Annual BTC MinedEnergy per BTC (kWh)=Annual BTC MinedTotal Energy (kWh)​

Mining one Bitcoin thus uses almost 331,320 kWh of electricity. Energy needs are predicted to rise as mining hardware develops and network hashrates climb. Technological developments and the integration of renewable energy help to offset these consequences, so opening the path for a more sustainable sector. Here are energy figures for other cryptocurrencies for comparison:

Ethereum (pre-PoS): ~60,000 kWh/ETH

Litecoin: ~18,000 kWh/LTC

Dogecoin: ~0.12 kWh/DOGE

Global Crypto Mining Energy Consumption:

Based on data from the International Energy Agency (IEA), all sectors' combined annual energy consumption comes out to be almost 25,000 TWh. The crypto mining industry accounts for ~200 TWh, 0.8% of the global total. While this is higher than many sectors, it remains lower than industries such as data centers and aluminum production.

The Carbon Footprint of Bitcoin Mining

Bitcoin mining’s carbon emissions pose a significant environmental challenge. The sector creates an estimated 50–60 million tons of carbon dioxide yearly, similar to the emissions of countries like Greece. However, carbon footprints vary greatly by region. For instance, mining operations powered by coal in Kazakhstan are far more carbon-intensive than those in Iceland, which uses renewable energy sources.

Despite concerns about decarbonization, supporters highlight efforts to make mining greener. Companies like Bitdeer actively incorporate sustainable energy sources. For example, Bitdeer leverages Bhutan’s hydropower resources, reducing environmental impact while creating substantial local employment opportunities.

Best Practices for Energy Efficiency in Crypto Mining

With increasing attention to environmental protection and the influence of policies and regulations, more mining facilities are now utilizing hydropower, wind, and solar energy, aligning with global sustainability goals. At the same time, adopting more efficient mining hardware, such as advanced ASIC devices like Sealminer, can provide higher computational power while consuming less energy. Further optimization of cooling systems, including immersion cooling and advanced airflow designs (such as Bitdeer’s mining containers - Minerbase), helps to enhance efficiency by minimizing energy losses from heat dissipation. More importantly, choosing locations with affordable and abundant renewable energy can significantly reduce operational costs and environmental impact.

The energy consumption of cryptocurrency mining is an important issue that cannot be ignored. While critics raise valid concerns about its environmental impact, proponents argue that by improving energy efficiency and integrating renewable energy, the industry is moving toward a more sustainable future. By responsibly addressing energy consumption, the cryptocurrency industry can drive global technological advancement while ensuring its long-term viability.

Learn more about cryptocurrency at Bitdeer

At Bitdeer, we are committed to supporting sustainable practices in cryptocurrency mining. From high-performance SEAL chip-powered ASIC miners to smart, mobile mining containers, we lead the industry in balancing efficiency with environmental sustainability. Visit our website to discover more about how we are creating the future of Bitcoin mining.