As Bitcoin Surges Past $35,000 So Does It’s Energy Consumption

Bitcoin's latest rally is again putting a spotlight on the energy consumption needed for crypto mining.

Bitcoin Jumped to another all time high this week, topping an incredible $35,000 (a 338% yearly increase). The digital currency has seen somewhat of a revival in popularity with celebrities and prominent business figures all touting it’s success and meteoric rise.

Financial institution, fintech’s and high-profile investors alike are also buying up bitcoin, simultaneously powering it’s current rally and further cementing it’s move into the mainstream.

Is Bitcoin the New Gold?

A recent working paper by Department of Economics of the University of Pretoria investigated the potential benefits of Bitcoin during economic volatility, similar to other “safe-heaven” assets, such as gold.

It’s findings suggest that Bitcoin is in fact a hedge against turbulent times – however there are some caveats, namly:

  1. Gold is still around and works just fine as a safe-heaven asset.
  2. Unlike Gold, Bitcoin has only been around for a decade and therefore it may be too early to really say if its as reliable.
  3. It’s digital and unlike Gold, a physical asset, you cant trade it without the internet. In the event of a cataclysmic collapse of the economy (and society as a result) bitcoin would simply cease to exist.

Sure, that last point is highly unlikely but not impossible and it shows one of the limiting factors of Bitcoin.


Still, this isn’t stopping a mass of investors from jumping on the bitcoin hype train and unlike Gold which is seen as “old money”, a new generation of investors see Bitcoin and cryptocurrencies as the future.

Retail investors and FOMO (fear of missing out) is one factor helping push up the price of bitcoin and as we have seen in 2020, the pandemic coupled with working from home have given rise to millions of mobile traders with instant access to crypto markets.

The other, more important factor, is that large financial institution like Paypal, Fidelity and Square have also made moves into the cryptocurrency (and others are set to follow suit). Especially since unlike Bitcoin’s 2017 rally, various financial instruments now exist, giving them more confidence in the cryptocurrency.

All this is to say that Bitcoin isn’t going anywhere anytime soon and the energy hungry cryptocurrency has some unintended consequences.

Not so green: Bitcoin now uses as much energy as The Netherlands

Cambridge University’s Bitcoin Electricity Consumption Index ( tracks energy usage of bitcoin mining and network power. Its Annualised consumption figure currently stands at 108.01 TWh, placing it just shy of The Netherlands 2019 estimated figure of 110.68 TWh.

To put it another way, the Bitcoin network uses more energy than both Switzerland and Portugal combined.

In fact a 2018 study published in Nature shows that Bitcoin Mining requires 3 times as much energy to generate an equivalent USD value as Gold. Moreover, the energy use of crypto mining Bitcoin has increased 2 fold since 2018.

How “crypto mining” works

Unlike actual mining, “crypto mining” is essentially the process of solving very long math problems of ever increasing complexity. The kind of complexity that can only be achieved by specialised servers or crypto farms.

Their job is twofold:

  1. To work as auditors, essentially bookkeeping every bitcoin in existence, ensuring that transactions are legitimate and that no double spending occurs.
  2. To mine new bit coins into existence, a process that gets more complex due to the nature of blockchain.

This requires a huge amount of computational power, which in turn requires a huge amount of energy. Where that energy comes from, therefore has big implications for the environment.

Bitcoin’s latest rally is again putting a spotlight on the energy consumption needed for crypto mining.

Why Energy Consumption is important

Due to the fact that crypto mining can be done anywhere in the world with its only prerequisites being access to electricity, the internet and hardware, its environmental impact or carbon footprint are entirely dependent on primary energy source.

Depending on what country that may be, the CO2 emitted can vary wildly. In China alone (responsible for 72% of all Bitcoin mining), the carbon footprint was a staggering 4.5 million metric tons of CO2 in 2018. To put that into perspective, that’s higher than Mexico’s 2018 per capita emissions of 3.77 metric tons.

Bitcoin's latest rally is again putting a spotlight on the energy consumption needed for crypto mining.
Source: Quantification of energy and carbon costs for mining cryptocurrencies (

Top Bitcoin Mining Countries

Bitcoin's latest rally is again putting a spotlight on the energy consumption needed for crypto mining.
  • China: 72%
  • Russia: 6%
  • Malaysia 4.13%
  • Kazakhstan: 3.48%
  • Iran: 3.2%

As the popularity of Bitcoin and cryptocurrencies soar, how and where they are mined will drastically affect the amount of polluting CO2 they contribute to climate change.

Is it sustainable?

From a environmental perspective? Yes and no.

What is clear is that the amount of energy required will continue to grow and in the short term this will lead to more pollution (something we really don’t need more of as we try to switch to more green economies).

In the long term, as energy generation become greener (and cheaper), Crypto mining will undoubtable move from expensive dirty energy sources to cheaper greener ones (if for no other reason than financial ones). The shift between the short term energy needs and long term sustainability will require close attention and eventual regulation.

From a financial perspective?

It’s anybody’s guess. However, one difference between the current rally and one in 2017 is that this time round, Bitcoin feels more mature and clarity in regulation (which didn’t exist before) is giving investors a confidence they did not have before. Will there be a pullback? Of course, there always is, but it is unlikely to be on the scale seen in 2018.

What do you think? Is Bitcoin here to stay? Have you invested already or do you think it’s still too much of a gamble? Let us know in the comments and join the conversation.

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Darie Nani

Blogger, developer and business mentor.

Articles: 221

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