Bitcoin’s Energy Consumption

A shift in perspective

You might have heard that Bitcoin wastes a tremendous amount of energy. You might also have heard that Bitcoin will use half a percent of the world’s electric energy by the end of the year, the computations used for mining don’t do anything useful, and if the current rate of growth continues it will suck up all the energy and we are all going to die.

Bitcoin is Offensive

Bitcoin is a global, permission-less, censorship-resistant network. Its nature is inherently offensive. It offends governments, bankers, and central authorities alike. Hell, offending banks was the whole point of this experiment in the first place.

“In comparison to modern distributed databases, blockchains are slow, ponderous, unnecessarily redundant and overly paranoid.”

Dhruv Bansal

As Nick Szabo so succinctly put it: “Bitcoin offends the sensibilities of resource-conscious and performance-measure-maximizing engineers and businessmen alike.” It also offends our globally shared understanding that wasting energy is bad, and energy-efficiency is always good.

“What-what the hell is a gigawatt?”

Mining Blocks and Coins

The name “mining” stems from the proposition that bitcoin has more in common with gold and other precious metals than paper money. Satoshi made this clear in one of his posts.

“In this sense, it’s more typical of a precious metal. Instead of the supply changing to keep the value the same, the supply is predetermined and the value changes.”

— Satoshi Nakamoto

Hence bitcoins are not printed, they are mined. Even though we talk about “mining bitcoins” all the time, keep in mind that it isn’t bitcoins which are mined. Blocks are mined, and miners are currently rewarded with new bitcoins if they find a valid block. Miners are rewarded because finding new blocks is inherently difficult. The system is set up in a way that the difficulty of finding a new block is adjusted automatically so that a new block is found every 10 minutes on average. Differentiating between “mining bitcoins” and “mining blocks” helps to point out a couple of things:

Cryptographic Walls

Until very recently, securing something meant building a thick wall around whatever is deemed valuable. We all know how to do this, and we all agree that this is a sensible thing to do.

The End of Mining New Bitcoins

Bootstrapping a new network is difficult. It’s like trying to convince everyone to buy a fax machine if you are the only guy in the world with a fax machine. It’s really, really hard. As outlined above, Satoshi solved this problem by adding a block reward mechanism, which acts as (a) the controlled currency supply of Bitcoin and (b) an incentive for people to participate in the network to expand and secure the public ledger.

John Nash commenting on the game theoretical aspect of Satoshi’s invention.
In Bitcoin, code truly is law.
Bitcoin’s controlled supply and block reward over time.

Modern Blocks of Marble

Once you wrap your head around proof-of-work, it becomes more and more clear that the energy consumption of the Bitcoin network is not a bug, it’s a feature. As far as we know, you can’t cheat the laws of thermodynamics. Given that we don’t have any world-shattering breakthroughs in physics, mathematics and/or quantum computing, expending energy is the only way to flip bits, and flipping bits is the only way to mine new blocks.

“By attaching energy to a block, we give it “form”, allowing it to have real weight & consequences in the physical world.”

— Hugo Nguyen

Proof-of-work is essentially a mechanism to easily check the truthfulness of the statement “I worked really hard to create this thing”. From that perspective, our new and fancy computational blocks are a bit like blocks of marble, and proof-of-work is a bit like looking at a beautiful marble statue. It is immediately obvious that a lot of work went into creating the statue. Cheating is extremely hard, because creating such a glorious statue without actually doing the work is pretty much impossible. You can’t throw a block of marble against a wall and everything which is not David will fall off. It’s not impossible, but it is very, very, very unlikely. Instead, you have to chisel away at the marble, and you have to do it properly and with care. One might argue that this is one of the reasons why great artworks are so valuable: a lot of thought, care and work was expended to create them.

Oldschool proof-of-work by Michelangelo. Photo by Jörg Bittner Unna

Security Through Purity

Another feature disguised as a bug is the randomness of bitcoin’s proof-of-work. A common suggestion for improvement is that we could use all this electricity to do something else, something truly useful, like finding prime numbers or compute protein foldings, in addition to securing the network.

The problem with doing something else — something that other people might consider useful — is that that splits the reward. It means that miners have two reasons for which they are mining.

Andreas M. Antonopoulos

Splitting the reward can lead to a situation where “it’s more worthwhile to do the secondary function that it is to do the primary function”. Bitcoin will never have this problem. Bitcoin guarantees its security by the purity of its proof-of-work algorithm.


I hope to have planted the seed for a shift in perspective: that spending energy on proof-of-work is not a waste, but a worthwhile endeavor.

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