Bitcoin Energy Consumption Index

Key Network Statistics

*The assumptions underlying this energy consumption estimate can be found here.

Did you know?

Everzwijn since its inception Bitcoin’s trust-minimizing overeenstemming has bot enabled by its proof-of-work algorithm. The machines performing the “work” are consuming large amounts of energy while doing so. The Bitcoin Energy Consumption Index wasgoed created to provide insight into this amount, and raise awareness on the unsustainability of the proof-of-work algorithm.

Note that the Index contains the aggregate of Bitcoin and Bitcoin Specie. A separate index wasgoed created for Ethereum, which can be found here.

What kleintje of work are miners performing?

Fresh sets of transactions (blocks) are added to Bitcoin’s blockchain toughly every Ten minutes by so-called miners. While working on the blockchain thesis miners aren’t required to trust each other. The only thing miners have to trust is the code that runs Bitcoin. The code includes several rules to validate fresh transactions. For example, a transaction can only be valid if the sender actually wields the sent amount. Every miner individually confirms whether transactions adhere to thesis rules, eliminating the need to trust other miners.

The trick is to get all miners to agree on the same history of transactions. Every miner ter the network is permanently tasked with preparing the next batch of transactions for the blockchain. Only one of thesis blocks will be randomly selected to become the latest block on the chain. Random selection te a distributed network isn’t effortless, so this is where proof-of-work comes ter. Te proof-of-work, the next block comes from the very first miner that produces a valid one. This is lighter said than done, spil the Bitcoin protocol makes it very difficult for miners to do so. Ter fact, the difficulty is regularly adjusted by the protocol to ensure that all miners te the network will only produce one valid bock every Ten minutes on average. Once one of the miners ultimately manages to produce a valid block, it will inform the surplus of the network. Other miners will accept this block once they confirm it adheres to all rules, and then discard whatever block they had bot working on themselves. The fortunate miner gets rewarded with a immobile amount of coins, along with the transaction fees belonging to the processed transactions ter the fresh block. The cycle then starts again.

The process of producing a valid block is largely based on trial and error, where miners are making numerous attempts every 2nd attempting to find the right value for a block component called the “nonce“, and hoping the resulting ended block will match the requirements (spil there is no way to predict the outcome). For this reason, mining is sometimes compared to a lottery where you can pick your own numbers. The number of attempts (hashes) vanaf 2nd is given by your mining equipment’s hashrate. This will typically be voiced ter Gigahash vanaf 2nd (1 billion hashes vanaf 2nd).

Sustainability

The continuous block mining cycle incentivizes people all overheen the world to mine Bitcoin. Spil mining can provide a solid stream of revenue, people are very willing to run power-hungry machines to get a lump of it. Overheen the years this has caused the total energy consumption of the Bitcoin network to grow to epic proportions, spil the price of the currency reached fresh highs. The entire Bitcoin network now consumes more energy than a number of countries, based on a report published by the International Energy Agency. If Bitcoin wasgoed a country, it would rank spil shown below.

Speciaal from the previous comparison, it also possible to compare Bitcoin’s energy consumption to some of the world’s fattest energy consuming nations. The result is shown hereafter.

Doorslag footprint

Bitcoin’s thickest problem is not even its massive energy consumption, but that the network is mostly fueled by coal-fired power plants ter China. Coal-based electrical play is available at very low rates te this country. Even with a conservative emission factor, this results te an extreme doorslag footprint for each unique Bitcoin transaction.

Comparing Bitcoin’s energy consumption to other payment systems

To waterput the energy consumed by the Bitcoin network into perspective wij can compare it to another payment system like VISA for example. Even tho’ the available information on VISA’s energy consumption is limited, wij can establish that the gegevens centers that process VISA’s transactions consume energy equal to that of 50,000 U.S. households. Wij also know VISA processed 82.Trio billion transactions te 2016. With the help of thesis numbers, it is possible to compare both networks and showcase that Bitcoin is utterly more energy intensive vanaf transaction than VISA.

Of course, thesis numbers are far from flawless (e.g. energy consumption of VISA offices isn’t included), but the differences are so extreme that they will remain shocking regardless. One could argue that this is simply the price of a transaction that doesn’t require a trusted third party, but this price doesn’t have to be so high spil will be discussed hereafter.

Alternatives

Proof-of-work wasgoed the very first overeenstemming algorithm that managed to prove itself, but it isn’t the only overeenstemming algorithm. More energy efficient algorithms, like proof-of-stake, have bot ter development overheen latest years. Te proof-of-stake coin owners create blocks rather than miners, thus not requiring power thirsty machines that produce spil many hashes vanaf 2nd spil possible. Because of this, the energy consumption of proof-of-stake is negligible compared to proof-of-work. Bitcoin could potentially switch to such an overeenstemming algorithm, which would significantly improve sustainability. The only downside is that there are many different versions of proof-of-stake, and none of thesis have fully proven themselves yet. Nevertheless the work on thesis algorithms offers good hope for the future.

Energy consumption prototype and key assumptions

Even however the total network hashrate can lightly be calculated, it is unlikely to tell what this means te terms of energy consumption spil there is no central register with all active machines (and their precies power consumption). Te the past, energy consumption estimates typically included an assumption on what machines were still active and how they were distributed, ter order to arrive at a certain number of Watts consumed vanaf Gigahash/sec (GH/s). A detailed examination of a real-world Bitcoin mine shows why such an treatment will certainly lead to underestimating the network’s energy consumption, because it disregards relevant factors like machine-reliability, climate and cooling costs. This arbitrary treatment has therefore led to a broad set of energy consumption estimates that strongly deviate from one another, sometimes with a disregard to the economic consequences of the chosen parameters. The Bitcoin Energy Consumption Index therefore proposes to turn the problem around, and treatment energy consumption from an economic perspective.

The index is built on the premise that miner income and costs are related. Since electro-therapy costs are a major component of the ongoing costs, it goes after that the total electro-therapy consumption of the Bitcoin network voorwaarde be related to miner income spil well. To waterput it simply, the higher mining revenues, the more energy-hungry machines can be supported. How the Bitcoin Energy Consumption Index uses miner income to arrive at an energy consumption estimate is explained te detail here, and summarized ter the following infographic:

Note that one may reach different conclusions on applying different assumptions. The chosen assumptions have bot chosen ter such a way that they can be considered to be both intuitive and conservative, based on information of actual mining operations. Te the end, the aim of the Index is not to produce a volmaakt estimate, but to produce an economically credible day-to-day estimate that is more accurate and sturdy than an estimate based on the efficiency of a selection of mining machines.

Recommended Reading

The Bitcoin Energy Consumption Index is the very first real-time estimate of the energy consumed by the Bitcoin network, but certainly not the very first. A list of articles that have focussed on this subject te the past are featured below. Thesis articles have served spil an inspiration for the Energy Index, and may also serve spil a validation of the estimated numbers.

If you find an article missing from this list please report it here, and it will be added spil soon spil possible.

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GUIMiner won’t commence mining on Slush’s pool

I commenced co-mining on Slush’s pool successfully for about 48 hours, but from there on I toevluchthaven’t bot able to connect to it again. It logs ter the console this, no matter if I’m using a valid worker and password or not:

Of course, I’ve checked my connection, and I’ve commenced GUIMiner with administrator privileges. I’m using Windows 7.

Two Answers

The problem is that te GUIMiner, the URL for Slush’s pool is:

That address has bot deprecated, and it falls back to the GetWork protocol. From Slush’s Pool news:

Default mining URL for Stratum is stratum.bitcoin.cz:3333 . If you’re still using api.bitcoin.cz , please fix your URL to prevent fallback to deprecated Getwork protocol.

Te the GUIMiner interface, instead of choosing “Slush’s Pool” from the dropdown menukaart, choose “other” and then come in

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