Cryptocurrency Energy Consumption
There is no direct way to calculate how much energy is used for Bitcoin and cryptocurrency mining, but the figure can be estimated from the network's hashrate and the consumption by commercially-available mining rigs. For example, the Cambridge Bitcoin Electricity Consumption Index estimates that Bitcoin, the most widely-mined cryptocurrency network, used an estimated 85 Terawatt-hours (TWh) of electricity (0.38% of global electricity use) and about 218 TWh of energy (0.13% of global energy production) at the point of production—more than Belgium and Finland, using the latest country energy estimates from 2019.3
Another estimate by Digiconomist, a cryptocurrency analytics site, places the figure at 130.3 Terawatt-hours, based on energy consumption through July 9, 2022. This computes to around 1,455.8 kilowatt-hours of electricity per transaction, the same amount of power consumed by the average American household over 49.9 days.4
Ethereum, the second-largest cryptocurrency network, was estimated to use 62.77 Terawatt-hours of electricity per year, based on energy consumption through July 9, 2022. The average Ethereum transaction required 163 kilowatt-hours of electricity. However, since Ethereum rolled out its proof of work upgrade in September 2022, electrical energy requirements have dropped to 0.01 TWh per year, with one transaction using 0.03 kWh.4
More than 20,000 different cryptocurrencies and over 500 exchanges exist worldwide.5 None of the cryptocurrency energy use reports or calculations account for the energy expended to develop new coins or administer services for them.
The amount of energy consumed by cryptocurrency mining will likely vary over time, assuming that prices and user adoption continue to vary. Cryptocurrency mining is a competitive process: as the value of the block reward increases, the incentives to start mining also go up. Higher cryptocurrency prices mean more energy being consumed by crypto networks.
Why Cryptocurrency Mining Requires Energy
The energy intensity of crypto mining is a feature, not a bug. Bitcoin mining is the automated process of validating Bitcoin transactions without the intervention of trusted third parties like banks.
The way the transaction validation process is designed uses large amounts of energy—the network depends on the computational power of thousands of mining machines. This dependency maintains the security of cryptocurrency blockchains that use proof-of-work consensus.
Environmental Impacts of Cryptocurrency Mining
Calculating the carbon footprint of cryptocurrency is more complicated. Although fossil fuels are the predominant energy source in most countries where cryptocurrency is mined, miners must seek out the most inexpensive energy sources to remain profitable.
Digiconomist estimates that the Bitcoin network is responsible for about 73 million tons of carbon dioxide per year—equal to the amounts generated by Turkmenistan.6 Based on data through September 2022, Ethereum produced an estimated 35.4 million tons of carbon dioxide emissions before dropping to 0.01 million tons following its transition to proof of work.4