Energy Waste

This remains one of the most prevalent FUD arguments in 2025. The essence of the criticism is that because bitcoin consumes too much energy, it is bad for the environment. However, the energy consumption argument is not always used in the same way --- it has at least three distinct forms. The first claims that the consumption is large and that alone makes it bad. The second argues that not only is the consumption high, but it is also a waste. And the third focuses on the claim that the algorithm used is inefficient, proposing to fix it by changing the source code.

The first type of criticism is usually accompanied by comparisons with the energy consumption of entire countries, which immediately evokes the idea of a lot. They do not compare it with the energy consumption of aviation or online gaming. Yet the world spends more energy playing video games online¹ than mining bitcoin. This alone should set off alarm bells: how is it possible that there is so much concern about bitcoin’s energy consumption and none whatsoever about the energy consumption of video games?

If one type of consumption worries us greatly and another not at all, when both are of a similar order of magnitude, we are making a value judgment. That is, we are saying that one of them is a waste and the other is not. But does this mean that the benefit of playing video games online is greater than the benefit bitcoin provides? If bitcoin gives us freedom, privacy, the ability to save for the future, and ultimately a fairer and more prosperous society, does all of that have less value than playing League of Legends or Minecraft? But above all… who decides what energy is best spent on, or which uses of energy are valid and which are not?

For all of us who want to live in a free society and believe in human rights, this should be enough. Having an authority decide what a person can and cannot spend electricity on is a completely unacceptable intrusion into each person’s private property --- the electricity they have purchased. But we will not stop here; we will examine each of the different aspects of the criticism in more depth.

A Very Large Expenditure

Let us calculate what bitcoin’s network energy consumption actually is today and compare it with total global energy production. To estimate the energy consumption, it is enough to observe three things:

• Mining requires no permission --- no license needs to be obtained from Satoshi. Anyone who wants to mine can do so, anywhere in the world. All that is needed is energy, mining equipment, and an internet connection.

• As a consequence of the above, the mining business is extremely competitive --- some miners even operate at a loss. This means profits continually tend toward costs, and only those who mine with cheaper energy and more efficient equipment remain profitable.

• Third, given the pace of improvement in the energy efficiency of mining hardware, equipment is rarely profitable for more than four or five years.

Taking these three facts into account, let us suppose that the 600 exahashes per second reached in 2024 were mined using the newest and most efficient AntMiner S21, which Bitmain brought to market at the end of 2024. The AntMiner S21 has an efficiency of 17.5 joules per terahash. If all 600 exahashes per second were performed using the AntMiner S21, the energy consumed in a year would be 92 TWh.

However, this is not a reasonable assumption, since this model has been on the market for a very short time. Running the same calculation with the S19XP Hyd, which is somewhat less efficient, gives an annual consumption of 109 TWh. With the S19 Pro, 155 TWh; with the S19, 179 TWh; and with the S17, 300 TWh. Let us now estimate a reasonable but also conservative mix for 2024: only 15% of the hashrate is performed with the S21, another 15% with the XP Hyd, 45% with the S19 Pro, 20% with the S19 --- both of which have been on the market for more than four years --- and still 5% with hardware such as the S17. With this estimate, we arrive at an annual consumption of 137 TWh.

Finally, we must consider that in a data center, energy is not consumed only by the servers --- there is also other equipment. The PUE (Power Usage Effectiveness) coefficient is the ratio between a data center’s total consumption and the consumption of the servers alone. Since we are making a conservative calculation, we take the highest value in the range reported by miners according to the University of Cambridge²: 1,2. This gives us, as the final result of our estimate, that the total energy consumed by the bitcoin network in 2024 was 165 TWh.

On the other hand, according to the World Energy Outlook 2024^↗ report from the International Energy Agency, global energy production in 2024 was 178000 TWh. Dividing both figures, we find that bitcoin’s energy consumption as a percentage of total energy produced in a year is slightly under 0.1%.

Does this 0.1% suggest a catastrophic future in which humanity runs out of energy because mining consumes it all? Probably not. Keeping this revealing figure --- 0.1% --- in mind, and the fact that online gaming consumes more than twice as much, when we hear criticisms about bitcoin’s energy use, we will likely hear them differently. In all likelihood, we will see them for exactly what they are: intellectually dishonest and perhaps malicious attempts to turn environmentally conscious people against bitcoin emotionally.

But some critics argue that even if it is not too much today, it will grow very rapidly. And it is certainly quite possible that consumption will increase in the future. But estimating how much it will grow requires accounting not only for the rise in bitcoin’s price (which does indeed increase the incentive to mine and therefore energy consumption), but also for the effect of the halving, which every four years cuts in half the new bitcoins created in each block, reducing the incentive to mine. This is apparently something the author of the Newsweek article “Bitcoin Mining on Track to Consume All of the World’s Energy by 2020”, published in November 2017,³ failed to consider. It is hard to imagine how anyone could publish such a claim. Did they genuinely believe that by 2020 there would be no planes, no trains, no cars, no ships, no heating, no electricity to turn on lights, no electronics or appliances in homes, no functioning telecommunications networks --- in short, that we would have returned to the Middle Ages, because all energy would be dedicated to mining bitcoin? The prediction is so absurd that it can only be attributed to bad faith; ignorance alone is not sufficient to explain it.

As a conclusion to this first part of the criticism: bitcoin’s network consumption amounts to 0.1% of total energy production.

A Waste

This is a value judgment, so we cannot make a calculation of waste as we did in the previous section. Those who say this assume that bitcoin has no value, that it contributes nothing --- unlike playing video games online.

Is driving a Porsche 911 a waste of fuel? How many pairs of shoes can I own at most and still be a responsible, environmentally conscious citizen? What is the “reasonable” amount of clothing beyond which it becomes waste? What sense does it make for a third party to decide that I can spend electricity to play games online but not to mine bitcoin? What if I do not play video games and I use the electricity I save by not gaming to mine instead? And what if, instead of playing League of Legends, I play SatoshiLand? SatoshiLand is a game in which each character searches for nonces that result in a valid hash, and several players can join with different strategies to search for nonces collectively. Would my new “video game” be banned? Should there be regulation of what my character can do inside the game? If we continue down this slippery slope, we quickly reach absurdity --- the game would have to permit killing, as many games do, but not searching for numbers.

The problem with all these questions is that the assessment of something as waste must be made by each individual according to their own preferences and personal circumstances. It is each of us who must decide what we spend our money on and when. If we believe the State should decide these things for our own good, we will soon arrive at a totalitarian dystopia. It would also have to decide which places we can and cannot go in order to avoid generating too much CO₂ through transport, which sports we can and cannot do because they are either insufficiently safe or disrespectful of the environment, how much meat we can eat at most, what time we must be home for our own safety, what can and cannot be said, how many children we can have at most… The list of prohibitions in the name of the supposed common good ends up turning the planet into a high-security macro-prison.

The problem with the so-called common good is that no such thing exists. Nobody has the moral authority to define what the common good is. Each individual can choose what is good or bad for themselves, but it is not possible to decide that for everyone. One person might consider it a waste to own more than five shirts or dresses, and if they were the moral authority, they might want to ban having more than five — but many others would find that idea appalling. A vegan who likes to dress fashionably would want to ban eating meat but would place no limit on the number of dresses one can own. Any prohibition of this kind in the name of the supposed common good collides with the individual’s right to private property. In one of his most famous books, The Road to Serfdom^↗, Hayek brilliantly argued the problems that collectivism brings about. The essence that defines collectivism in any of its forms --- whether communism, socialism, fascism, or nationalism — is the subjugation of the individual to the State in the name of the supposed common good. Given that this ideology was responsible for more than sixty million deaths in the last century, it would perhaps be more accurate to refer to the common good as the common harm --- since on the one hand it is a harm (it leads to totalitarianism) and on the other it is a very common way of thinking in twenty-first century Western societies.

Proof of Work is Inefficient

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The Proof of Work algorithm consists of proving that many calculations have been performed --- in other words, ultimately proving that a large amount of energy has been expended. Since that is precisely what the defenders of this FUD want to avoid, the idea is to find another algorithm that achieves the same consensus but is not based on Proof of Work.

In late 2022, Ethereum even switched from PoW to PoS. Proof of Stake (PoS) is a consensus algorithm in which the basic idea is to replace miners with stakers. Stakers are owners of a certain amount of ether (the currency of the Ethereum network) who lock it up to enter the lottery for the block reward. It is also a kind of lottery, like Proof of Work, but without the energy expenditure of Proof of Work. Although it seems like a good idea at first glance, it is in reality --- like so many things that appear good on the surface --- exactly the opposite.

It doesn’t matter who shows you the longest chain, Proof of Work speaks for itself.

— Satoshi Nakamoto

This quote from Satoshi is the key. In PoS, the cost of creating a possible transaction history is virtually zero, which means that when a network node is presented with two different histories, it has no way of knowing which one is correct and must necessarily trust someone to tell it which is valid and which is not. PoS eliminates the energy expenditure, yes --- but at the cost of reintroducing the trusted-third-party problem that bitcoin solves with Proof of Work. It is complete nonsense, because if we have to trust someone, why use a blockchain in the first place? If decisions are made centrally, a client-server architecture where the server holds the database is far more efficient than a blockchain --- even one using PoS --- and both have the same properties. In short, the Proof of Work algorithm is necessary for decentralization.

Since we have already established that the consumption is 0.1% of global energy production, seen the dangers of calling it waste, and exposed the nonsense of trying to find an alternative to Proof of Work, we could end this chapter here. But if we did, the ecologist who also defends individual freedom might still think: “even though it is 0.1% and I cannot call it waste without attacking private property, I still do not like it because it is bad for the environment”. As it turns out, that is not true either.

Benefits for the Environment

In the following section, we will examine three arguments that show bitcoin, far from being harmful, is extraordinarily beneficial for the environment.

It Incentivizes Renewable Energy Sources

Beyond not emitting CO₂, renewable energy sources have another major advantage over fossil fuels: the “fuel”⁴ is free (sun, wind, water). But unfortunately, they also have a significant drawback: they are not dispatchable. A solar or wind plant cannot increase production when demand rises, and although there are some synergies between solar and wind --- since it tends to be windier at night --- this is not enough. The higher the percentage of renewable generation, the harder it becomes to ensure the stability of the electrical grid.

In a coal, oil, or gas thermal power plant, the amount of electricity generated at any given moment can be easily adjusted to match what is needed, by burning the required amount of fuel. These plants are fully dispatchable and are currently essential because in an electrical grid, the system operator constantly adjusts supply to meet demand, since no technology exists to store energy at scale efficiently. Electricity production is planned every day for every hour and is managed 24 hours a day, 365 days a year.

This non-dispatchability makes it difficult for renewables to exceed a certain percentage of total generation. To raise this ceiling, strategies are needed to adjust users’ electricity consumption in response to grid events such as demand peaks or periods of low supply. This set of programs and strategies, known as Demand Response, enables efficient energy demand management, improves the resilience of the electrical grid, and makes greater integration of renewable energy possible. And this is precisely where bitcoin shines --- in these Demand Response programs --- as it is a completely dispatchable load. Bitcoin miners can agree to reduce consumption or even allow the system operator to temporarily disconnect them from the grid when necessary, in exchange for a favorable energy purchase agreement. Rather than adapting the supply of the renewable plant to demand, bitcoin allows demand to be adapted to available supply.

Does it not equally benefit fossil fuel-based generation plants? No --- that is precisely the point. Bitcoin reduces the problem of integrating renewable energy sources into the grid at scale. Fossil fuel plants have no such problem; they are fully dispatchable. The symbiosis exists only between bitcoin and renewable energy. This is of no interest to companies invested in fossil fuel power plants, of course, but it is a reality that will become increasingly evident as more projects emerge. There are already cases where this has been implemented and is currently operating, such as in ERCOT (Electric Reliability Council of Texas), the electrical grid operator in Texas.

It Reduces the Environmental Impact of Oil Wells

At most oil wells, crude oil comes out accompanied by natural gas, whose main component is methane. Since many of these wells lack the infrastructure to channel the natural gas, there are two alternatives: venting or flaring. Venting consists of directly releasing the natural gas (mainly methane) into the atmosphere without burning it. Flaring is the controlled burning of the associated natural gas in an open flame, converting the methane and other hydrocarbons into carbon dioxide and water. Although it may seem counterintuitive at first glance, it is far better for the environment to burn the methane than to release it unburned into the atmosphere. This is because methane has a greenhouse effect approximately eighty times greater than CO₂⁵ and during combustion, methane (CH₄) plus oxygen (O₂) are converted into CO₂ plus water. Bitcoin introduces a new incentive here, since the natural gas obtained can be monetized on-site, at the oil field itself, without needing to transport it. In typical flaring, between 90 and 93% of the methane is burned, but in electricity generation systems, more than 99% is captured and burned. At the same time as electricity is produced, methane emissions into the atmosphere are significantly reduced. Several companies already exist --- such as Crusoe Energy Systems and Upstream Data --- that offer mining solutions using gas from oil wells, and oil giants such as ConocoPhillips and Equinor are already doing it.

It Discourages Consumerism.

While the previous two arguments are quite significant, the deepest and most relevant effect by far is the shift in incentives that a bitcoin-based economy will introduce into society. Today’s consumerism is responsible for the excessive pace at which we exploit nature and for the enormous generation of waste. This consumerism is strongly incentivized by the impossibility of saving, as we saw in chapter three, which was dedicated to the fiat system. The logical behavior of a rational person within the fiat system is to take on debt and consume. Not just the behavior of a spendthrift --- which of course also applies — but that of a rational person. If the purchasing power of the money you save is eroding, the rational thing to do is spend it as soon as possible. This extra bias toward spending over saving is what is responsible for today’s level of consumerism.

With bitcoin, the opposite is true --- the rational behavior of a person in a bitcoin-based economy is to save. Saving 0.1 bitcoin is worthwhile, because you know that no one has the ability to devalue it, and therefore with 0.1 bitcoin in ten, twenty, or fifty years’ time you will be able to buy more things than you can buy today. Bitcoin discourages consumerism and waste. In this new framework, each of us individually will make much more rational use of natural resources, thereby protecting the environment. Bitcoin will do more for the environment than all the NGOs in the world combined, because it aligns individual incentives with the environment. It does not depend on education programs or on raising global awareness, it does not depend on how well Greta Thunberg⁶ or Greenpeace perform --- with bitcoin, it is enough for each person to do what is best for themselves, which is something we can count on. This is by far the greatest and deepest effect bitcoin will have on the environment.