DeutschA veritable outcry went through the crypto world when Tesla boss Elon Musk backed Bitcoin and announced huge investments in the leading cryptocurrency. But recently, the billionaire, who had recently appeared primarily as a Dogecoin fan, backtracked and referred in his justification, among other things, to the high energy consumption of the leading crypto currency. (The background to the Musk tweet) Reason enough to shed light on the environmental balance sheet of Bitcoin (BTC) and the second-placed system Ethereum and its currency Ether (ETH). The focus is on mining, security and transactions.
Mining as the Main Cause of the Worrying Consumption Values
First of all, let’s take a look at the annual total consumption of both networks. Current statistics show an annual energy consumption of 92 terawatt hours for mining within the Bitcoin blockchain (as of April 2021). In comparison, experts estimated the energy consumption of the Ethereum network at 32 terawatt hours. Even here, there is a clear difference, which from an environmental point of view can certainly be used as an argument against Bitcoin. Important to mention: There are different evaluations. The values determined sometimes go far beyond those mentioned. An example concerning Bitcoin: The renowned Cambridge Centre for Alternative Finance (CCAF) has calculated a probable energy consumption of up to 120 terawatt hours for Bitcoin mining for 2021. For comparison, the Netherlands are often cited, whose annual consumption is only a few terawatt hours behind Bitcoin consumption. It is difficult to calculate exact values.
But the truth is: BTC uses dramatically more energy to mine new coins than is used to create new Ether.
Increasing Selection of Ecologically Working Networks in the Crypto Universe
It should not be forgotten that there are various other crypto systems that have attached greater importance to the aspect of energy efficiency from the outset. It is also true that the Ethereum community is gradually introducing the “Ethereum 2.0” format, moving away from the previously used proof-of-work consensus and from mining (in favor of a staking approach). This will also massively reduce energy consumption. However, there are also various projects and companies working on a significant reduction in consumption for Bitcoin and thus the reduction of environmentally harmful emissions.
But so far:
Mining in particular causes enormous power consumption due to the high technical effort involved, which is why cryptocurrencies in general are repeatedly criticised.
How much Energy Do BTC and ETH Transactions Consume?
According to Digiconomist, the power consumption for executing a transaction in the Bitcoin blockchain amounts to almost 850 kilowatt hours (kWh). Here, the comparison to the consumption of a Swiss citizen is interesting. According to analysts, every citizen of Switzerland consumes 18 kWh per day. The values in this context also vary very significantly. Some analysts see consumption per transaction at 300 kWh. The same applies to the fees per transaction, which in both cases is related to the extent of the activities in the system itself. As far as the Ethereum network is concerned: There are surveys that put energy consumption at about the level of the daily consumption of a US household. To visualise how much CO2 a transaction in the Ethereum system corresponds to: Experts cite an amount of 34.63 kilograms of CO2 per transaction. In other words, according to the Cambridge Centre for Alternative Finance, the Ethereum network consumes 50 kWh with 15 transactions per second. Compared to Bitcoin consumption, this may seem low. Overall, however, this value is quite considerable.
Security in Crypto Systems is also a Consumption Factor
The security guaranteed by the consensus mechanism used also results in energy consumption for Bitcoin and Ethereum. As important as this aspect is, it plays a role with regard to environmental pollution. The more complex the legitimation process, the higher the need for electricity/energy. The hopes of many crypto users are based on the fact that significant technological improvements will be made in both cases in the near future. The diverse innovative approaches seem to promise exactly this. Until then, however, the high consumption data for Bitcoin and its biggest competitor is factually the best reason for many crypto fans to rely on other offers on the market. The dilemma: So far, there are only a few networks that can really meet the demands of very environmentally conscious users.
