Let's say that Bitcoin takes the place of the USD within 10 years and see what the energy consumption of the bitcoin network will be.
facts:
- USD "M2" money supply in 2009: 8E12 USD (
http://money.howstuffworks.com/how-much-money-is-in-the-world.htm)
- in 2023 there will be 19E6 BTC. Mining will be honoured with 6.25 BTC/10min => 329'000 BTC/y (
https://en.bitcoin.it/wiki/Controlled_supply)
assumptions:
- BTC takes the place of USD => one BTC will be worth 421'053$ (of course valuation of BTC will devaluate USD...but let's leave that aside.)
- let's say 1kWh costs 10cts USD
- all miners use the same recent technology. Or at least with equal efficiency in MH/J
- people are not paying significant transaction fees by 2023 (the more people will pay fees, the higher the resulting profitable global energy consumption)
(edit) In a free market the following formula approximates energy consumption of any PoW based cryptocurrency:
GlobalEnergyConsumptionForMining ~= (MiningReward + TransactionFees) * bitcoinValueInUSD / EnergyCostInUSDperkWhSo mining would be profitable somewhere below an energy consumption of the bitcoin network of:
break even price: 421'053$/BTC*329'000BTC/y = 139E9$/y
equivalent energy: 1.39E12 kWh/y
Today's global electricity consumption is around 20E12 kWh/y (
http://en.wikipedia.org/wiki/Electric_energy_consumption)
This means that the bitcoin network by itself would raise global electricity consumption by up to 7%Please show me where I'm wrong!
We could of course put this less dramatic:
- in 2033 it would be 174E9 kWh/y
- in 2100 it would be 2.65 GWh/y
today we would be at 5MWh if all miners were using newest ASIC's (
https://en.bitcoin.it/wiki/Mining_hardware_comparison)
(edit)CONCLUSIONS:
- according to economical basics, energy consumption of the bitcoin network does not depend on mining gear efficiency!
- the problem described applies to every proof-of-work based currency (including Litecoin) because proof-of-work equals proof-of-energy-consumption at a market equilibrium
- bitcoin value is NOT directly backed by energy consumption. But mining rewards and transaction fees are.
- the slower the bitcoin value rises and the lower the transaction fees, the lower the energy consumption of the bitcoin network on the long run
All the said things make sense but you should also think that all the growing businesses require energy and every day our demand for energy is also increasing and the energy required by bitcoin Miners isn't that big amount at all. The politicians are making a big deal out of it, they are connecting bitcoin mining with rising climate temperature and also global warming which isn't true at all.