In recent years, global energy consumption has increased rapidly, driven by the growing population’s increasing demands, causing environmental challenges for the planet.
One sector that contributes to the burden of environmental pollution is the Bitcoin network as well as other cryptocurrencies and blockchain-based networks. This comes from their excessive power consumption requirements to operate data centers that work 24/7 to support and secure the network through consensus mechanisms such as Proof of Work.
The coronavirus pandemic negatively impacted countless industries worldwide. During the first quarter of 2020, the demand for electricity decreased significantly and, according to researchers, changes brought by the pandemic will continue to affect the energy sector for the coming years.
Global Energy Overview 2020
In the first quarter of 2020, the demand for electricity decreased significantly as a result of COVID-19. Fortunately, these demands were mostly covered by renewable energy sources (RES) due to favourable weather conditions and stable energy production from RES, simultaneously reducing the demand for electricity from fossil fuels.
In September 2020, the Bitcoin network’s estimated consumption was 63–73 TWh per year. A few months later it almost doubled and continues to grow. The electricity consumption of the network was evaluated at 150 TWh, which is 0.4% of the world electricity consumption (Updated: 11 Nov 2021). Moving into 2021, there was a decrease of around 30% in the total consumption of Bitcoin Mining, while currently the consumption is estimated to be at 90 TWh.
Environment & Climate Change
In 2020, CO2 emissions fell by 5.8% from energy demand as a result of the pandemic hitting oil demand compared to other energy sources. The main factor in carbon dioxide emissions’ decline stems from lower demand for electricity as a direct result of COVID-19 related lockdowns and social distancing restrictions.
In 2021 a recovery in economic activity is expected, which will reverse the 4.5% decline in coal demand observed in 2020, restoring global coal demand above 2019 levels. The electricity sector accounted for over 40% of the decline in coal use in 2020. In 2021, the global demand for coal seems to be higher than in 2019, where it can reach the data of 2014. Although, everything shows that the biggest increase in 2021 will be recorded by gas.
According to the above data from Cambridge, the estimated annual consumption of the Bitcoin network is 90.85 TWh. (Updated 3 Sept 2021)
The annual consumption increased rapidly in a very short period of time, which means that the global carbon dioxide emissions increased, reaching more than 73.5 million tons per year. Over time, carbon dioxide emissions increased significantly due to the increase of servers to support the network, which resulted in a considerable environmental impact.
Renewable Energy Sources
The production of energy from RES is constantly increasing; the pressing issue of long-term energy storage, however, still remains to be solved. The use of RES increased by 3% in 2020, as the demand for all other fuels decreased considerably and the COVID-19 pandemic contributed significantly to this.
According to the Bitcoin Mining Council’s Q2 2021 , 56% of the used energy for Bitcoin mining comes from Renewable energy sources.
Renewable energy sources electricity generation in 2021 increased by almost 7%.
The share of renewable energy sources in global electricity production increased by 29% in 2020, compared to the 27% increase observed in 2019. According to the IEA’s research, the demand for renewable sources seems to increase by 8% (8,300 TWh), the largest annual increase recorded since the Industrial Revolution. However, it is important to note that production will increase from all RES in 2021, and it is estimated that it will be 30% of the total electricity generation mix.
In a March 2021 analysis by the University of Cambridge, researchers found that Bitcoin requires more energy from entire countries, such as Argentina. More specifically, in August 2021 the University of Cambridge ranked the Bitcoin network in 36th place in terms of energy consumption worldwide in comparison to other countries.
The amount of power that bitcoin mining is already consuming to support the grid is excessive, but its demand is constantly growing, and this signals an increase in electricity demand. This is already a significant problem for the Blockchain ecosystem and needs to be solved, as it impacts the environment and our planet. It is necessary for Bitcoin Mining to be powered by clean energy sources to minimise environmental impact.
GX Blocks Energy S.A. focuses on the sustainable development of innovative green energy solutions for the operation of data centers, in order to reduce carbon emissions from Mining Data Centers through RES.
(Last Update: 12 November 2021)