Here’s how much electricity it takes to mine Bitcoin and why people are worried

A lot of energy and money comes from these mining rigs. 


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Tesla CEO Elon Musk shook the crypto market when he said his company would no longer accept Bitcoin for vehicle purchases. His tweet on May 13 cites an increase in the use of coal and other fossil fuels to generate the power used for mining as the reason behind his decision. Bitcoin dropped by 14% after that tweet and it continued to fall. 

Bitcoin, Ethereum, Dogecoin and other popular cryptos reached record highs this year, raising concerns about the amount of energy needed to mine the coins. Warehouses of Bitcoin mining rigs run 24 hours a day, consuming more power than the whole of Argentina. As the energy bill for crypto mining rises, so does the amount of carbon and waste, adding to the growing climate crisis. 

Here’s what you need to know about crypto mining and its energy uses. 

What is cryptocurrency mining? 

When Bitcoins are traded, computers across the globe race to complete a computation that creates a 64-digit hexadecimal number, or hash, for that Bitcoin. This hash goes into a public ledger so anyone can confirm the transaction for that particular Bitcoin happened. The computer that solves the computation first gets a reward of 6.2 bitcoins, or about $225,000 at current prices. 

Other cryptocurrencies use similar mining technologies, contributing to the overall energy usage. 

What is a crypto mining rig? 

It’s a barebones computer with multiple graphics cards, or GPUs, instead of the single-card standard. Rigs usually use powerful GPUs from Nvidia and AMD to handle calculations and require high-wattage power supplies. The popularity of mining has led to a shortage of graphics cards.

A crypto mining farm in Nadvoitsy, Russia.

A crypto mining farm in Nadvoitsy, Russia. 


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Why is crypto mining so energy-intensive? 

For starters, graphics cards on mining rigs work 24 hours a day. That takes up a lot more power than browsing the internet. A rig with three GPUs can consume 1,000 watts of power or more when it’s running, the equivalent of having a medium-size window AC unit turned on. 

Crypto mining businesses can have hundreds or even thousands of rigs in one location. A mining center in Kazakhstan is equipped to run 50,000 mining rigs

Not only do rigs take up power, they also generate heat. The more rigs you have, the hotter it gets. If you don’t want your rigs to melt, you need some cooling. Many mining rigs have multiple built-in computer fans. But if you have multiple rigs, the room quickly gets hot, requiring external cooling. Small operations, like those run by individuals, can get by with a typical standing fan. Mining centers, however, need a lot more cooling, which in turn requires even more electricity. 

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How much energy does mining take? 

The Digiconomist’s Bitcoin Energy Consumption Index estimated that one Bitcoin transaction takes 1,544 kWh to complete, or the equivalent of approximately 53 days of power for the average US household. 

To put that into money terms, the average cost per kWh in the US is 13 cents. That means a Bitcoin transaction would generate more than $200 in energy bills. 

Bitcoin mining used more energy than Argentina, according to an analysis from Cambridge University in February. At 121.36 terawatt-hours, crypto mining would be in the top 30 of countries based on energy consumption. 

Crypto mining rigs

A wall of mining rigs in Quebec, Canada.


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Why is taking up so much energy bad for the environment? 

Fossil fuels account for more than 60% of the energy sources in the US. A majority of that percentage is natural gas and a minority is coal. The carbon dioxide produced by fossil fuels is released into the atmosphere, where it absorbs heat from the sun and causes the greenhouse effect

As mining rigs consume more energy, nearby power plants must produce more electricity to compensate, which raises the likelihood that more fossil fuels will be used. States that have struggling coal power plants, such as Montana, New York and Kentucky, are trying to cash in by wooing crypto mining companies. 

What’s being done about this energy problem? 

Not much. The 3rd Global Cryptoasset Benchmarking Study from the University of Cambridge found that 70% of miners based their decision on what coin to mine on the daily reward amount. Energy consumption made up only 30% of their choice. 

Access to renewable energy at a low price, however, attracts crypto miners. China’s Sichuan Province has the country’s second-largest number of miners due to its abundance of cheap hydroelectric power. Its rainy season helps to generate so much energy that cities are looking for blockchain firms to relocate in order to avoid wasting power. 

Musk said in May he spoke with North American miners, and they committed to using renewable energy sources. He then tweeted on June 13 that Tesla would allow Bitcoin transactions again if there was “reasonable clean energy usage,” which he listed at being approximately 50%. 

The operators of Ethereum, the second-most-popular blockchain behind Bitcoin, are doing something to change the amount of energy its miners consume. Ethereum 2.0 is an upgrade that will be completed sometime this year or in 2022. Instead of computers trying to solve computations — referred to as proof of work — computers will be randomly selected to create blocks for the blockchain, while computers that weren’t selected will validate those blocks created. 

To ensure miners do their job, each miner has to stake 32 Ethereum coins, also called Ether, which is equivalent to $85,000, hence the term for this protocol is called proof-of-stake. This change reduces the amount of energy needed for Ethereum mining.

What other cryptos are more energy-efficient than Bitcoin?

A growing number of coins — there are more than 10,000 of them — use the proof-of-stake protocol that Ethereum 2.0 will transition to, resulting in a drop in power consumption. 

Cardano, for example, uses its own proof-of-stake protocol and consumes 6 gigawatt-hours annually. To put that in perspective, Cardano’s energy use is a GWh and a half shy of providing enough power for the South Pacific island country of Niue, with its population of 1,620 people, for a year. By comparison, Bitcoin uses 126.09 terawatt-hours annually, which is equivalent to the amount of energy Pakistan, with its population of 225 million, uses each year. 

Following Musk’s May 13 tweet, Cardano reached record highs because it was seen as an environmentally friendly alternative to Bitcoin. Its price peaked at $2.47 on May 16, but its value fell and is currently at $1.57.