We often hear rumours here and there, that Bitcoins will soon use up the entire world’s power reserve. So much so, that conspiracy theorists might conclude that these must be fueled by international banking cartels, who are trying to dissuade every against Bitcoins as a genuine alternative to fiat currency.
However, this is far from the truth, and in fact, it’s not quite possible for bitcoin to consume the world’s power. The metric and parameters considered to reach this conclusion at been faulty from the very outset.
Dr. Jonathan Koomey, the Consulting professor at Standford University, and famous for Koomey’s law, said that the assumptions that Bitcoin mining will consume all of the world’s energy, or that Bitcoin emissions could singlehandedly push global warming levels up by 2°C were not correct. He elaborates,
“While I encourage everyone in the electricity sector to track Bitcoin as a potential source of new load growth, please use caution and avoid being misled by the hype. Breathless media coverage papers over the uncertainties in the underlying data, and makes it seem like Bitcoin is taking over the world, but in fact it’s likely only 0.1% of global electricity consumption, and it is unlikely to continue growing at recent historical rates.”
He also points out that this is not the first time that a new technology is being targeted and vilified as an energy hog. Back when the internet was a new thing for the masses in the early 2000s, it had fallen victim to the same kind of treatment. He then goes on to write,
“Misleading factoids about information technology electricity use emerged from coal-industry funded studies around the year 2000, at the time of the first dot com bubble and the California electricity crisis. They popped up again, from the same authors and funders, in 2005 and 2013 […]The claims were reported in every major newspaper, cited by investment banking reports and politicians of both political parties, and avidly promoted by people and companies who should have known better […] All of these claims turned out to be bunk, but it took years of creating peer reviewed research to prove it. We found that the Internet (defined as those authors defined it) used only 1% of US electricity in 2000, all computers used 3%, the total would never grow to half of all electricity use, and that the factoid about the wireless Palm VII overestimated networking electricity by a factor of 2000.”
Dr Koomey opines that the part of the world’s electricity supply that currently is needed for the mining of Bitcoin is at about 0.1%. It sure uses a lot on energy, mining hardware has become increasingly efficient and sophisticated with every generation, and there will always be an increase of energy on earth, regardless of Bitcoin. Though its a major concern for electric companies when they expand operations, but as Koomey says, “It’s not a crisis, but we need more research.”