How Much Power does it take to Mine a Bitcoin? – Miner Daily
How much energy does it take to mine a bitcoin? In this evaluation we found that an average of 143,000 kWh of energy is required to produce one bitcoin. Our method for discovering the amount of energy it takes to mine a bitcoin uses data from relevant asic models, the size of the network, and the current profitability of the miner.
We also calculate the production rate of bitcoin and use it to find out how much energy the entire network consumes. we found that the bitcoin network uses an average of 128,248 mwh, or 128 gwh of electricity per day to produce 900 bitcoin. but this estimate always changes along with the size of the hash rate and other factors.
Reading: How much energy to mine 1 bitcoin
we sign off with a note about the future growth of the bitcoin network and demand for energy… find out why we believe bitcoin is the scapegoat for your energy consumption. Also, find out why we think hash rate growth may be slowing and is not linear.
basic energy consumption per bitcoin
the best asic miner on the market right now is the antminer s19 pro 110 terahash per second (th/s) from bitmain. This model houses a couple of hundred TSMC 7nm microprocessor chips. consumes 3250 watts (w) of power per hour with an efficiency of 29.5 w/th. but, a single machine takes about 3 years to produce a bitcoin.
so, to find out how much energy it takes to mine a bitcoin, we need to consider how much energy the entire network uses instead of a single unit. Let’s use a method similar to the one we used in our ‘how much does it cost to mine a bitcoin’ investigation to accomplish this.
how much energy does it take to mine a bitcoin with s19 pros?
according to data from the mining pool, it takes around 122,000 th/s for twenty-four hours to create ~1 bitcoin at the current btc price, current network size and difficulty level >.
and, by simple division, we find that 122,000 th/s is equivalent to 1,109 s19 pros at 110 th/s each. so to find out how much power these 1109 asics require, we multiply the number of machines by their kilowatt (kw) spec for a day of pumping.
therefore86,509 kwh is required to produce one bitcoin with s19 pros. this is the same as 86.5 megawatt-hours (mwh) or 0.0865 gigawatt-hours (gwh). Read more about electricity unit conversions here.
but the bitcoin network is not only made up of s19 pros, there are less efficient machines. consequently, the actual energy demand to produce a bitcoin is slightly higher than this first prediction. Let’s try other models of bitcoin miners that represent the entire population of the network.
how much energy does it take to mine a bitcoin per asic model?
To get a better idea of how much energy is spent per bitcoin, we can plot the hash rate based on asic models and manufacturers’ market shares. to achieve this we allocate a number of asic models in proportion to the estimated market share of each manufacturer. see below.
Now, let’s collect information on models of individual bitcoin miners.
Below we show the model name, terahash, kilowatts and efficiency specifications for the most popular bitcoin mining hardware. we also find the number of asics needed to generate 122,000 th/s, which is equal to one btc. Lastly, we take the product of the number of asics to mine a btc and the kw spec for 24 hours. this provides the estimated kwh per btc for each type of miner.
We find that with an average network efficiency of 48.7 w/th, it takes around 142,498 kWh to produce one bitcoin. this equates to 142 mwh, or 0.142 gwh. Next we will see how much energy the network consumes per day.
It is important to understand that bitcoin variables are volatile. for example, the hash rate was 185 eh/s before the bitcoin mining bans, which is 35% higher than today. so this means that in April the network used more than a third more electricity to create a bitcoin than in August 2021.
Also, it’s hard to know exactly how many of each asic model are currently running, or the exact market share of the manufacturers. so these are assumptions.
See also: Bitcoin Price Predictions 2020: Best BTC/USD Value Forecasts
but thanks to improvements in the energy profiles of bitcoin miners along with advances in the microprocessor chip, the hardware uses less energy per terahash to produce bitcoin over time. however, bottlenecks in manufacturing limit the release of new machines, keeping older generation hardware on the network.
bitcoin production rate
If we want to calculate how much energy the entire bitcoin network consumes each day, we need to do a little legwork. first we need to find out the current rate of production of bitcoin.
Let’s do a quick review of how the bitcoin blockchain works. bitcoin nodes receive and organize pending transactions from bitcoin users in the mempool. transactions awaiting confirmation in the mempool are prioritized based on the highest to lowest rate set per transaction. therefore, transactions with very low fees may lie dormant in the mempool for some time, while transactions with high fees are quickly verified.
When proof-of-work (pow) miners find a block, multiple transactions are added to that block. the number of transactions in each block is controlled by the block’s maximum byte size. when the block is filled with pending transactions, power miners verify and timestamp that block.
Once the block is sealed, it is added to the blockchain and appears on the public ledger. each block added to the blockchain secures the previous blocks and serves as a “confirmation”. For example, most providers and exchanges only accept a BTC payment once 6 confirmations have been completed, i.e. six additional blocks are added after a verified transaction to the blockchain. therefore, the more confirmations, the more secure a transaction is.
block discovery speed and reward
block rate is the rate at which power miners discover new blocks through a hashing puzzle. the amount of time it takes for energy miners to find a block automatically adjusts over time based on the difficulty level. the target block detection rate is every 10 minutes. therefore, the average block rate is one block every 10 minutes. this equates to 6 blocks per hour, or 144 blocks per day.
When miners find a block, they receive a block reward which is also the issuance of a new bitcoin. the block reward is currently 6.25 bitcoins per block. so, the coin issuance rate is 6.25 bitcoins every 10 minutes.
although keep in mind that the block reward decreases over time. in the year 2024, the block reward will be reduced from 6.25 to 3,125 bitcoins in what is known as a halving event. halvings occur every four years, read more about mining trends here.
bitcoin production per hour, day and year
Using the variables described above, we find that the production rate of bitcoin is 37.5 btc per hour for the next three years (until the 2024 halving). this means that around 900 bitcoins are produced per day and 328,500 are created per year. see our calculations below.
the bitcoin self-audit difficulty setting always redirects the block rate to 6 per hour. this happens every 2016 blocks, or about every 2 weeks. this mechanism keeps the system running like clockwork without mediation. it also incentivizes miners to use the most energy-efficient machines to stay ahead of the competition. As the hash rate grows, the difficulty of bitcoin mining becomes more difficult.
However, sudden drops in hash rate between times of difficulty can cause the block pace to lag, resulting in a temporary decrease in coin production. Similarly, when the hash rate grows between times of difficulty because more miners join the network, the block pace can temporarily speed up. so more bitcoins are produced per hour. regardless, the block pace always averages 6 per hour without fail.
bitcoin total energy consumption rate
Next, we find out how much power the grid uses on a daily basis. To do this, we take the product of the average number of kWh it takes to mine a bitcoin and the production rate of bitcoin.
From our calculations above, we know that with an average efficiency of 48.7, it takes about 142,498 kWh to produce one bitcoin. this is equivalent to 142 mwh or 0.142 gwh.
To get the daily amount of energy used by the network, we take the kWh to mine one bitcoin multiplied by the daily production rate of 900 coins. therefore, the bitcoin network currently consumes 128,248,199 kwh, or 128,248 mwh, or 128 gwh per day.
How many bitcoins can a power plant produce?
To put this in perspective, a typical nuclear power plant produces 1000 MW of electricity. this equates to 24,000 mwh per day, or 24 gwh. while a large-scale power supplier like the three gorges dam in china yields a maximum capacity of 22.5 gw. this equates to 540,000 mwh per day, or 540 gwh.
See also: Bitcoin Cash – Peer-to-Peer Electronic Cash
So, in theory, a typical power plant could generate up to 171 bitcoin per day, and the Three Gorges Dam could generate four times the maximum 900 bitcoin per day. see how we did it below.
today the world has about 62,500 power plants. When you consider that a large power plant could run the entire bitcoin network four times over, bitcoin’s power consumption seems less threatening.
In addition, the world produces more than 460 twh of energy per day, or 460,000 gwh. therefore, bitcoin uses 0.03% of the world’s energy per day. We also know that much of the energy bitcoin miners use is stranded or wasted energy. So, in the grand scheme of things, the amount of energy it takes to mine a bitcoin is negligible.
haters gonna hate
Why is bitcoin the scapegoat for its energy consumption? Perhaps because financial institutions and world leaders fear losing their cantillion privileges. Richard Cantillon’s theory from the 1700s states that the beneficiaries of newly printed money are the wealthy. finally, the money reaches the population, but the workers pay a higher price. this creates inflation and an unequal distribution of purchasing power.
today things are more extreme than what cantillon observed. hedge funds, private equity, and bankers benefit greatly from the ‘brrrrrrr’ of money printers. wealthy rent-seekers live off the interest paid by lower-level citizens in the money chain, bringing no real benefit to society. bitcoin fixes this by limiting the coin supply to 21 million and not favoring a certain social class.
but do bitcoin miners have access to newly printed money? yes, but this money is not all profit, miners must use their profits to stay competitive. This is because the distribution of coins is done in the form of rewards for miners, which is based on game theory. game theory doesn’t care about your social class privileges.
In addition, bitcoin allows for a greater amount of privacy than today’s financial institutions. while the older brother must always know what the lower population is doing in order to control them.
In conclusion, the amount of energy needed to mine a bitcoin is estimated to be between 86,000 and 286,000 kWh. and the bitcoin network consumes about 128 gwh per day to produce 900 bitcoin. But remember that variables like hash rate, btc price and miner earnings are dynamic and affect the results.
The beauty of bitcoin’s design is that it has the ability to self-regulate to ensure its block rate remains constant and miners’ earnings are competitive. but will the network grow forever as btc price rises and asics hashing capabilities advance? no, network growth is limited in capacity.
network growth vs logistic growth model
several people cite that the bitcoin network will grow linearly year over year based on historical data. however, due to negative feedbacks and exogenous constraints, this is not the case. bitcoin trends are not linear because it is a complex system.
Indeed, despite continuous btc price increases, miner profitability declines over time thanks to negative feedback. see in green below.
Furthermore, the amount of power available to bitcoin miners is staggering. This limits the growth of the network. For illustration, we consider the total electricity available to bitcoin miners as the “carrying capacity” in a logistic growth model below. By definition, carrying capacity in a species biological model is the total amount of habitat resources, such as food and shelter, available to support a limited population size. Similarly, bitcoin miners require electricity to maintain their population size.
Furthermore, despite advances in microchips that lower asic efficiency profiles and increase profit margins, the total cost and energy required to mine a bitcoin will increase over time. this is due to a combination of circumstances that can be called “growth limits” on the size of the network.
Limits to growth include network difficulty: As more miners join the network, the difficulty increases, making it more difficult to mine a bitcoin. this reduces a miner’s earnings and increases the cost of mining a bitcoin. Additionally, electricity rates will increase over time as fossil fuels are phased out and the value of the dollar declines with inflation. in addition, the regulations add additional fees. For example, from January 2022, Kazakhstan will introduce a mining fee per kWh, and in Canada, bitcoin miners who do not use clean energy will have to pay for their carbon footprint. Lastly, the decrease in miner rewards due to halvings will cause the base production price of a bitcoin to increase every four years. although, the btc price increases should partly offset the increased production costs.
hence, we believe that the bitcoin network is entering the phase of slow growth shown in the logistic growth model above. Going forward, we believe network size may peak and then reach relative balance or decreased growth >. Of course, we could be wrong. what do you think? share your thoughts.
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