Analysis by the University of Cambridge shows that Bitcoin (BTC) consumes more electricity than the entire country of Argentina, the BBC writes.
Cambridge researchers say cryptocurrency "mining" for Bitcoin — which uses heavy computer calculations to verify transactions — consumes around 121.36 terawatt-hours (TWh) a year.
Using an analysis tool that generates energy estimates for cryptocurrencies, the team of researchers ranked Bitcoin’s electricity consumption above Argentina (121 TWh), the Netherlands (108.8 TWh), and the United Arab Emirates (113.20 TWh) — and they say it is close to reaching the consumption levels of Norway (122.20 TWh).
The amount of energy could also meet the energy needs of the University of Cambridge itself for 688 years, the results show.
What's more, the team behind the research say this level of energy consumption is unlikely to go down unless the value of the currency slumps.
As Bitcoin price increases, so does its energy consumption
After Bitcoin's value rose to a record $48,000 this week following electric vehicle maker Tesla's $1.5 billion investment in the currency, and its announcement that it might soon accept BTC payments, critics are questioning the company's move.
They say that Tesla's investment in Bitcoin contradicts its image as a force for environmental progress.
As the price of Bitcoin increases, so does the currency's energy consumption, says Michael Rauchs, a researcher at The Cambridge Centre for Alternative Finance, who co-created the tool that generates energy consumption estimates for cryptocurrencies.
"It is really by design that Bitcoin consumes that much electricity," Mr. Rauchs told the BBC. "This is not something that will change in the future unless the Bitcoin price is going to significantly go down."
As a counter-point, the researchers do say that Bitcoin is one of a large subset of energy consumers that can rank alongside entire countries.
For example, always-on but inactive home devices in the U.S. alone could power the entire Bitcoin network for a year. Overall, the estimates show that Bitcoin accounts for 0.56 percent of the world's energy consumption.
Bitcoin mining's carbon footprint
Bitcoin "mining" involves using — often specialized — servers to connect to the cryptocurrency blockchain network.
These servers are tasked with verifying transactions made by people sending or receiving Bitcoin. The process involves solving puzzles that act as a barrier for anyone attempting to fraudulently edit the global Bitcoin transaction history.
Bitcoin miners are rewarded by occasionally receiving small amounts of Bitcoin in a feature that is often likened to a lottery.
Miners often fill entire warehouses with Bitcoin mining computers. This is a high-energy consumption practice as the servers are typically on around the clock in order to be able to carry out the verifications — a previous study from 2019 showed that Bitcoin mining produces around 22 megatons of CO2 emissions a year, which is comparable to the total emissions of Las Vegas.
The University of Cambridge's tool models the economic lifetime of the world's Bitcoin miners and assumes all the Bitcoin mining machines worldwide are working with various efficiencies.
Using an average electricity price per kilowatt hour ($0.05) and the energy demands of the Bitcoin network, the researchers estimated how much electricity is being consumed at any one moment in time.
The parallel between Tesla's Bitcoin investment, environmental subsidies
Following Tesla's $1.5 billion Bitcoin investment, commentators said they were surprised by the implications of the investment:
"Elon Musk has thrown away a lot of Tesla's good work promoting energy transition," David Gerard, author of Attack of the 50 Foot Blockchain, argued.
"Tesla got $1.5bn in environmental subsidies in 2020, funded by the taxpayer. It turned around and spent $1.5bn on Bitcoin, which is mostly mined with electricity from coal. Their subsidy needs to be examined," he continued.
While some Bitcoin miners have used their servers to heat entire homes, there is still a worry that the cryptocurrency's CO2 emissions will spiral outwards as the currency rises in price.
Tesla CEO Elon Musk's recent comment — in an appearance on exclusive social network Clubhouse — that Bitcoin is "on the verge" of being widely accepted as a currency by the general public may work against the public image of the electric vehicle company.