Bitcoin mining receives a lot of negative press for its energy consumption. Before engaging with that criticism, one thing must be made clear that is often lost in the debate:
The story of civilization has been one of individuals figuring out how to capture and exploit energy in novel ways to improve their standard of living. The greatest tools for reducing poverty and improving quality of life — industrial processes, electrification, industrialized agriculture, air conditioning, mechanized transport — all consume vast amounts of energy. There is a direct correlation between increased energy consumption and real GDP. Refrigeration, aviation, and the internet all dramatically enhance our quality of life and consume copious amounts of energy in doing so.
When people say they are concerned about Bitcoin’s energy use, they are effectively saying they see no value in Bitcoin — and hence consider all costs associated with its production wasteful. That is an important distinction. It is a wholly different argument than being concerned about energy usage in the abstract.
The actual numbers:
Bitcoin consumed approximately 62 terawatts of electricity in 2020, representing 0.04% of global energy consumption and 0.1% of global carbon emissions. The 2017 World Economic Forum speculation that Bitcoin mining could consume as much electricity as the entire world by 2020 turned out to be grossly inaccurate — as most negative Bitcoin energy headlines are.
Bitcoin represents the latest technological breakthrough harnessing energy to improve living standards — particularly for the billions of people in less fortunate economic circumstances. It offers workers and savers a means to protect themselves from inflation by storing wealth in a medium independent of central banks and resistant to government expropriation. Bitcoin has been adopted by over 100 million individuals in its 13-year existence, with elevated adoption in countries with high inflation, capital controls, weak property rights, or poor governance.
The question is not whether Bitcoin consumes energy. The question is whether the value it creates justifies that consumption. On that question, the answer is increasingly yes.