Energy Consumption of Bitcoin Mining and the Transition to Clean Energy

Author: Energy Web

Compiled by: ChainCatcher

In the early 2000s, a new digital system emerged that promised to fundamentally change the way people interact online. Although it started small, it was adopted by millions in nearly every country on Earth over the following decade. As its popularity soared, so did its value. But lurking beneath the surface was a hidden cost: to achieve growth, it had to consume increasing amounts of electricity. From 2011 to 2021, its annual electricity consumption grew by 3,500%. Today, it consumes over 9,400 GWh per year—roughly equivalent to a small country like Costa Rica.

Of course, this is the story of Facebook. But it is also largely the story of Google (18,287 GWh in 2021, equivalent to Iceland) and Amazon (30,880 GWh in 2021, equivalent to Serbia), as well as Bitcoin. Fundamentally, all four do the same thing: convert electrical energy into bits of information. In fact, whether it’s posts, search results, cloud services, or cryptocurrencies, this is the core business model of the entire tech industry. However, Bitcoin has faced disproportionate scrutiny regarding its energy usage.

Especially in recent months, discussions around Bitcoin's energy consumption have reached a fever pitch, with the mining industry being singled out for punitive taxes, perplexing analyses, and even outright regulatory bans.

Why is Bitcoin mining's energy consumption so scrutinized compared to mainstream tech companies?

The answer boils down to two factors: a philosophical debate about the social value of cryptocurrencies and the actual lack of transparency in the mining industry's energy management practices. People often focus on the former, but addressing the latter in a credible way is key to overcoming the current hysteria.

Unfortunately, the heated debate about Bitcoin's impact on energy and climate is filled with exaggeration and mutual accusations.

On one hand, those who believe Bitcoin (and more broadly cryptocurrencies) has no social value argue that any and all electricity consumption is "bad" (even if in-depth, nuanced analyses seem to reflect this implicit assumption). A less extreme but common viewpoint is that because some Bitcoin mining operations clearly consume fossil fuels, Bitcoin mining as a whole is an illegitimate end use; even some degree of clean energy consumption is insufficient to justify its existence.

On the other hand are Bitcoin supporters, many of whom make exaggerated or overly simplistic claims about Bitcoin's role as a clean energy solution, or deflect reasonable questions by emphasizing the energy intensity of other industries and the traditional financial system.

Expanding one’s crypto worldview to condemn or glorify Bitcoin's energy consumption is unproductive. When it comes to real-world impacts, attempts to shame or regulate Bitcoin into nonexistence are as ineffective as defensive postures and improvisation. In fact, Bitcoin does consume a significant amount of electricity, and it is likely to continue doing so for the foreseeable future. Like any energy-intensive industry, it has the potential to either hinder or advance the clean energy transition, depending on where, when, and how it is mined.

Asking whether Bitcoin's carbon footprint is reasonable is the wrong question. A better way forward is to ask how Bitcoin can follow the trajectory of other mature industries to become a positive partner in the energy transition. In other words: what specific actions can Bitcoin miners take to promote clean energy and decarbonization?

Over the past two decades, large corporate buyers voluntarily purchasing clean energy have been a catalyst for the deployment and economies of scale of renewable power. Lessons learned and best practices are now being socialized through mature industry groups that provide decarbonization action playbooks, procurement tools, and sustainability reporting mechanisms; thus, even companies that consume large amounts of electricity can easily showcase climate leadership.

Unfortunately, there is no such thing in the Bitcoin community. Due to the lack of a shared framework to measure and recognize miners' sustainability commitments and practices, mining companies are left to fend for themselves, and the industry cannot respond to criticisms of its climate impact in a meaningful, data-driven way. What is needed is a standardized clean energy procurement practice and an initiative to drive collective action across the entire Bitcoin mining industry. This is why we launched the Green Proof of Bitcoin (GP4BTC).

GP4BTC is a solution that can bring consistent metrics and much-needed transparency to Bitcoin mining's climate impact, enabling industry stakeholders to make better decisions aligned with a net-zero future. The GP4BTC certification highlights climate-conscious miners who contribute to grid decarbonization by purchasing renewable energy, strategically locating mining operations in low-carbon grids, and participating in demand flexibility programs. The GP4BTC standard has been developed in collaboration with over 35 miners, NGOs, governments, grid operators, and other energy and crypto market participants, aligning with best practices in sustainability leadership from other industries (and will continue to evolve).

By showcasing sustainably operating miners, our goal is to create a virtuous cycle that makes clean mining easier to define, pursue, and monetize. Ultimately, we aim to make sustainable Bitcoin mining ubiquitous and position the Bitcoin industry as a positive supporter of the clean energy transition.

The notion that Bitcoin's continued growth and adoption automatically means a climate disaster is popular but misguided. There are climate-conscious miners with sophisticated energy management strategies. Bitcoin's decarbonization does not require bans, taxes, or proof of stake. By rolling up our sleeves and committing to transparency, we can scale these strategies to make carbon-free mining the new norm and truly position Bitcoin as a leader in the energy transition.