Study Finds Bitcoin Mining Energy Consumption Highly Overestimated

Last Updated: June 17, 2018 at 4:09 AM EST

A new mining study outed recently has concluded that the energy consumption that is used for mining has been highly overestimated by other studies made recently. This study uses a different methodology and different data to come up with a totally distinct panorama of the mining industry.

The study authors, Christopher Bendiksen and Samuel Gibbons, are employees of the research division of CoinShares, the company that sponsored the study, called “The Bitcoin Mining Network: Trends, Marginal Creation Cost, Electricity Consumption & Sources”. CoinShares is a UK based investment firm that bases its portfolio in cryptocurrency based instruments, as ethereum and bitcoin notes. CoinShares, working with bitcoin, is naturally interested in the sustainability and viability of bitcoin mining in the long run.

The study takes several liberties and makes a series of assumptions of factors like energy costs, mining hardware costs and years of mining to come with a conclusion that indicates that mining consumes half of the energy amount of what is currently believed to consume. It justifies this by stating that while computational mining power has indeed tripled, the efficiency of the hardware used to mine has doubled with tech improvements. It also declares that most of the energy used for mining is supplied by renewable sources, like hydroelectrical energy; a thing that has some logic, because miners look for cheap energy sources, and hydroelectrical energy is one of the cheapest kind.

This study seems to debunk another recent mining study that claimed that the bitcoin network was consuming more power than the entire country of Ireland, and could use up to 0.5% of the power produced for the whole world. Nonetheless, Alex De Vries, the author of the mentioned study, criticized his own article saying that there are too much unknowns in the equation because miners and mining companies tend to be secretive about its operations and products.

Finally, the authors of this paper also rely on many assumptions too, but they announced that this will be the start of an iterative series of studies to contribute to a better understand of the mining energy consumption issue.