About That Sensationalist Bitcoin Electrical Consumption Story

Authored by Charles Hugh Smith via OfTwoMinds blog,

Check the context before uncritically accepting sensationalist conclusions.

Let's start with a primer on how to write a sensationalist story that can be passed off as "journalism:"

1. Locate credible-sounding data that can be de-contextualized, i.e. sensationalized.


2. Present the data as "fact" rather than data that requires verification by disinterested researchers.


3. Exaggerate the data as much as possible and set the tone and context with emotionally laden words: "shocking," etc.


4. Select a context that sensationalizes the conclusion.

Now let's take a look at a story that has been swallowed whole, with little to no fact-checking or disinterested inquiry: bitcoin's electrical consumption, i.e. the electricity consumed by mining/maintaining bitcoin's blockchain.

One Bitcoin Transaction Now Uses as Much Energy as Your House in a Week

Let's start by stipulating that energy consumption is a consequential matter worthy of serious inquiry. It's important to measure the energy consumption of all the systems that operate within the current status quo, and compare the consumption levels of these systems.

With that in mind, let's take a look at the story.

Right off the bat, the context we're offered to grasp the enormity of bitcoin's mining consumption is the electrical consumption of Nigeria, a nation, we're breathlessly informed, with 186 million residents. Wow! That's a crazy amount of electrical consumption, right?

Let's do some very basic fact-checking before we accept sensationalist conclusions, shall we?

Nigeria consumes about 24 billion kWh annually, while the U.S. consumes 3,913 billion kWh annually.

So Nigeria uses 3/5th of 1% (0.6%) of the electricity the U.S. consumes.

Now let's compare that electrical consumption with the amount of electricity consumed in the U.S. by residential devices and chargers on stand-by, i.e. appliances, devices, chargers, gizmos, etc. that aren't in use and doing no work but that are still consuming electricity.

About a quarter of all residential energy consumption is used on devices in idle power mode, according to a study of Northern California by the Natural Resources Defense Council. That means that devices that are “off” or in standby or sleep mode can use up to the equivalent of 50 large power plants’ worth of electricity and cost more than $19 billion in electricity bills every year.

source: Just How Much Power Do Your Electronics Use When They Are ‘Off’? (May 7, 2016, New York Times)

(Please read the article to find out just how much power the 50+ gadgets in your home consume doing absolutely zero work.)

According to the U.S. Energy Information Administration, annual residential electrical consumption totals 1,410 billion kWh.

So 25% (the amount of household electricity consumed by stand-by devices) of 1,410 billion equals 352 billion kWh consumed annually by residential appliances and devices on stand-by in the U.S.

Now let's compare the annual electrical consumption of Nigeria (24 B kWh) with the annual residential electrical consumption of devices on stand-by in the U.S.

The annual electrical consumption of Nigeria (24 B kWh) is 6.8% of the annual electrical consumed by household devices on stand-by in the U.S. That means the supposed consumption of bitcoin mining is 1/14th of the power lost to residential devices on stand-by in the U.S., devices doing essentially nothing.

Now let's add in all the appliances and devices in government and private-sector offices on stand-by. Let's conservatively estimate another 150 B kWh lost to all this stuff on stand-by.

Now let's multiply the total of electricity lost to stuff on stand-by mode (doing no work whatsoever) in the U.S., 500 B kWh annually, by five, since the U.S. consumes roughly 20% of all electricity globally.

Electricity production 2016 (Enerdata)

The United States’ share of world energy consumption (EIA)

This gives us an estimate of all the electrical power lost to electrical appliances and devices on stand-by globally every year: 2,500 billion kHh. 1% of that wasted electricity is 25 billion kHh. If you reckon this seems high, let's shave these totals to 1,500 billion kHh and 15 billion kHh.

Let's go back to the story about bitcoin's consumption of electricity which tells us "a shocking 215 kilowatt-hours (KWh) of juice (is) used by miners for each Bitcoin transaction."

But then a few paragraphs down, we discover the electricity per transaction might only be 77 kWh-- nobody really knows for sure. Hmm. 77 is 36% of 215, so the "shocking" consumption might overstate actual consumption by a factor of three?

Let's choose a number between 77 and the "shocking" 215, since nobody really knows what the real number is: shall we guesstimate 135, or 2/3 of the high guesstimate? That would drop the annual consumption of bitcoin mining from 24 B kWh annually to 15 B kWh, less than 1% of the electricity wasted annually on stand-by devices doing no work whatsoever.

And so, um, bitcoin mining is a threat to the planet because it consumes less than 1% of all the electricity squandered by appliances and devices on stand-by? If we want to stop wasting so much energy, perhaps we should start by mandating near-zero stand-by power consumption for the hundreds of millions of devices which are not in use that are nonetheless sucking up electricity every second of every day.

Here's another thought: check the context before uncritically accepting sensationalist conclusions.

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Occident Mortal RAT005 Wed, 11/29/2017 - 20:07 Permalink

The fact remains that the entire bitcoin network current consumes about 56 times more energy than all of VISA's centralised data centres.VISA processes about 220,000,000 transactions per day, Bitcoin processes about 380,000 So a single bitcoin transaction uses about 30,000 times more electricity than a VISA transaction.

In reply to by RAT005

SILVERGEDDON Abitcoinbrain Wed, 11/29/2017 - 21:31 Permalink

Bitcoin electricity is mostly coal powered, so they are nuking the gay whales, and killing the unicorn ozone layer with global warming. Al Gore is doing a movie about how Bitcoin mining will turn this planet into Waterworld in less than 5 years. Fuck this - gonna buy a scrap supertanker, kit it out with quad fifties, Spam, cigarettes, and booze right now. Gonna go all Dennis Hopper only with showers, and more good looking women on my pirate crew.  

In reply to by Abitcoinbrain

GeezerGeek HillaryOdor Wed, 11/29/2017 - 19:47 Permalink

If we're to get concerned about wasting electricity, should we not look into the energy consumption resulting from a single search on Goolag or Bong or whatever? All those servers use up some serious kilowatts. They probably contribute to man-made global warming, too. Perhaps the servers used by search engines should be distributed to residents of northern areas to help keep them warm in winter.

In reply to by HillaryOdor

tmosley Bunga Bunga Wed, 11/29/2017 - 20:33 Permalink

All in on DeNileCoin, are we?If someone presented me with an accusation like that that, if true, could completely annihilate my investments, I think I would do a little more due diligence than just waving it off.But that's just me.By the way, that is the very argument that swayed me from being a bitcoin mega-bull to warning of its imminent destruction.

In reply to by Bunga Bunga

I_rikey_lice Bunga Bunga Wed, 11/29/2017 - 20:49 Permalink

Each Tether is supposed to be backed by 1 USD.Bitfinex has never been audited. All the proof is out there.Just cause you don't like tmosley, doesn't mean he is wrong.https://twitter.com/Bitfinexed?lang=enCheck the Tether creation out of nothing herehttp://omniexplorer.info/lookupadd.aspx?address=3MbYQMMmSkC3AgWkj9FMo5L… million created today to BTFD in bitcoin.

In reply to by Bunga Bunga

TwelveOhOne tmosley Wed, 11/29/2017 - 23:10 Permalink

I still don't get it, I've seen this story for a couple days.  So, if I created an unaudited currency (which I said could be audited) and tied it to the price of gold, and then proceeded to "print" up a bunch of them, why would my currency continue to stay tied to gold?Just don't get how this is evidence that Bitcoin will fall.  Seems more to be evidence that Tether will fall.But, I just don't know enough I guess.  I've read the Twitter account; what else convinced you?  Thanks.

In reply to by tmosley

bluez SILVERGEDDON Thu, 11/30/2017 - 00:48 Permalink

My cousin told me that I could make $2000 a day if I live on Jack Daniels, pickled eggs, beer, and beans with a pipe shoved up my ass, and made bit coins. At first I told her she was nuts, but I gave it a try anyway. Now I own a fabulous tropical island with a two-mile runway and a Lear jet. You can do this too! Just go to whiskypickedeggsandbeer.com. You will thank me forever.

In reply to by SILVERGEDDON

bluez bluez Thu, 11/30/2017 - 00:56 Permalink

I am sure the math and physics involved in the energy aspects of Bitcoin mining is somewhat non-trivial. However, word on the street is that even with the most efficient application specific hardware, Bitcoin output is not a whole lot greater than the cost of energy input. So if everybody had to have Bitcoins...

In reply to by bluez

Provocateur seataka Fri, 12/01/2017 - 14:41 Permalink

The author states "Check the context before uncritically accepting sensationalized conclusions" Then goes on to quote:  About a quarter of all residential energy consumption is used on devices in idle power mode, according to a study of Northern California by the Natural Resources Defense Council."Really?  1/4 of all residential electricity?  Does this sound reasonable to you? Please.  Pull the other one.

In reply to by seataka

Bunga Bunga Brazen Heist Wed, 11/29/2017 - 20:13 Permalink

Proof of work is the most meritocratic securing mechanism. It benefits the most efficient miners and mining equipment manufacturers. A monopolization is hardly possible, since because the entry barriers are low, mining equipment usually amortizes within a year.Proof of stake is prone to monopolization and abuse, since big players can and will change the rules via concentration of tradeable "votes"=coins. Amortization of stake coins will take at least an order of magnitude longer, so the entry barrier is way higher.

In reply to by Brazen Heist

Brazen Heist Bunga Bunga Wed, 11/29/2017 - 20:18 Permalink

Yes, barriers to entry for PoS are higher than PoW, because you must first own a stake in the coin, then spend money on mining, which will be capped in proportion to your stake. So why do you claim PoS will be prone to monopolization? Don't you mean PoW? It's under PoW that those with the means to afford the best mining equipment can mine more, like BitMain.In terms of consensual algorithmic voting, we'll have to see how that plays out.

In reply to by Bunga Bunga

Bunga Bunga Brazen Heist Wed, 11/29/2017 - 20:29 Permalink

As I explained, PoW entry barrier is lower due to about 10x faster amortization.BitMain isn't the only mining equipment maker. There are many others and mining ASICs is a permissionless technology.Monopolization with PoS is easier, because once you have certain stake, you can mine for free forwever, while with PoW you have to burn constantly money (electricity). It's simple math. 

In reply to by Brazen Heist

any_mouse Bunga Bunga Wed, 11/29/2017 - 20:07 Permalink

Basically, bitcoin development lifecycle is following standard Silicon Valley methodology.

Bitcoin is in an extended user test phase. Funded by users. Promoted by users.

The devs, who premined, sit back and Profit!!!

The initial financial investment was for some GPUs when they were cheaper. Premined in an airgapped lab, would not even need an Internet connection.

The underwear gnome business plan made real.

In reply to by Bunga Bunga

garypaul TeamDepends Wed, 11/29/2017 - 21:54 Permalink

Sorry CHS, but I think you blew it on this one. The issue isn't really how much power is consumed by bitcoin now. The issue is what happens when bitcoin is widely adopted and used by everybody for transactions. You see, this is the premise the Bitcoin-bugs use to justify their astronomical prices. How much power needs to be consumed then?? 

In reply to by TeamDepends