In recent months, numerous media outlets have claimed that the power used to conduct a single bitcoin transaction is the equivalent of that required to power an American home for over a week. The exact energy output that each bitcoin transaction consumes is unknowable, due to the varying efficiency of the hardware employed by miners. Despite such, several analysts have attempted to estimate the power consumption required to process bitcoin transactions.
Digiconomist Utilizes The “Bitcoin Energy Consumption Index” to Determine its Estimates Regarding the Total Power Consumption of the Bitcoin Network
Many recent stories claiming that each bitcoin transaction uses an amount of power comparable to that required to power an American home for a week have derived their estimates from the website, Digiconomist. As of this writing, Digiconomist estimates that each bitcoin transaction requires 255 kilowatt-hours (KWh) of power, which could power a U.S. household for 8.61 days. The website concludes that bitcoin consumes “0.13%” of global electricity consumption, comparing the total power consumption of the bitcoin network to that of Ireland.
Digiconomist concedes that “even though the total network hash rate can easily be calculated, it is impossible to tell what this means in terms of energy consumption as there is no central register with all active machines (and their exact power consumption).” Digiconomist employs what the website refers to as the “bitcoin energy consumption index” (BECI) as the basis for its estimates.
Analysts Are Divided in Their Estimates Regarding the Electricity Consumed on a Single Bitcoin Transaction
The BECI attempts to calculate the total USD mining revenues, assuming that “for every 5 cents that [are] spent on operation costs… 1 kilowatt-hour was consumed,” and that each miner will “spend 60% of their revenues on operational costs.” The BECI then “converts the costs to consumption” – which produces the estimate yielded by the BECI.
Although many media organizations are touting the BECI’s estimates as fact, the cryptocurrency community has not reached consensus regarding the BECI’s accuracy as a means to estimate the total power expenditure of the network…