According the Bitcoin Energy Consumption Index the whole Bitcoin network now consumes more than 50 terawatt-hours (TWh) of electricity per year. This marks a new major milestone for the increasing energy-hungry network, which has now surpassed countries like Singapore (49.5 TWh per year) and Portugal (49.8 TWh per year) in terms of electricity consumption.
Fueled by a meteoric rise in the Bitcoin price over the past few months, the power usage of the Bitcoin network has been increasing at a feverish pace. Just a little over three months ago, at the start of November 2017, the Bitcoin Energy Consumption Index was estimating the total electricity consumption of the Bitcoin network to be half of the current amount. On the first day of November, the estimated consumption was equal to 24.3 TWh per year. The average amount of electricity consumed per transaction has increased by an even bigger percentage over the same period (mainly due to a decrease in Bitcoin usage). At the start if November, the average electricity consumed per unique transaction was around 200 kilowatt-hours (KWh). Today, we’re looking at an average of about 700 KWh per transaction. An average U.S. household takes three weeks to consume this amount of electricity. It’s also more than 400,000 times more than what’s required for an average VISA transaction.
Of course, not everyone agrees with this estimate, but even the biggest optimist will have to acknowledge that Bitcoin’s electricity consumption has (more than) doubled over the last few months. On November 1, Motherboard put Bitcoin’s minimum electricity consumption at 1 gigawatts (about 9 TWh per year). Calculating that lower bound for today, February 19 (2018), would yield an electricity consumption of around 2.5 gigawatts (22 TWh per year). This number is based on the overly optimistic assumption that the network only includes the most efficient Bitcoin mining machines (running at optimal performance), and leaves no room for other sources of electricity consumption (like cooling) not reflected in the network’s total computational power (what this number is based on).
But even if the Bitcoin Energy Consumption Index isn’t representative for Bitcoin’s current electricity consumption, reality is likely to catch up soon. Countries like Iceland and Canada are facing a huge influx of requests from miners hoping to set up shop. In particular the situation in Iceland is escalating quickly. According to Icelandic energy firm HS Orka, “Bitcoin mining is becoming so popular that the country will likely use more electricity to mine coins than power homes this year”. On top of that, at the current rate, there won’t be “sufficient energy to supply the number of proposed Bitcoin mining centers”. Similar concerns are arising in Canada, where “more than 100 crypto mining companies have approached Hydro-Quebec” , according to spokesman Marc-Antoine Pouliot, hoping to take advantage of its low energy rates. Servicing all these requests is expected to be quite a challenge.
Bitmain Pushing Production into Overdrive
In the meanwhile, Bitcoin mining rig manufacturer Bitmain has been hard at work to meet the increased demand for new machines. Morgan Stanley estimates that Bitmain’s supplier, Taiwan Semiconductor Manufacturing Company (TSM), “has Bitcoin ASIC orders for 15-20K wafer-starts per month” per the start of 2018. Based on this, Bitmain is likely producing around half a million of new machines per month. This is a significant increase compared to the last quarter of 2017, where Bitmain’s production output was most likely around 300,000 new machines per month. Morgan Stanley adds that if these production rates are maintained for the full year, Bitcoin’s total electricity consumption could easily exceed 120 TWh per year by the end of the 2018. The latter is mostly in line with the Bitcoin Energy Consumption Index, which is predicting Bitcoin will be consuming 125 TWh per year (similar to a country like the Netherlands, Argentina or Sweden).
At the start of February 2018, Morgan Stanley even revised its chip-based production potential estimate to 200 TWh per year, if “the price of Bitcoin were to recover sufficiently” (Bitcoin mining revenues are down more than 50 percent compared to the peak in December). If Bitcoin were to reach that point, its total electricity consumption would be equal to more than half of the United Kingdom, and close to one percent of the total global electricity consumption. In any case, Bitcoin surpassing Singapore and Portugal in terms of electricity consumption is unlikely to be its last negative achievement event this year.