Recently, Alex de Vries, founder of Digiconomist, published a research article on the energy consumption of Bitcoin and cryptocurrencies.
In the article, he proposes that the energy consumption of Bitcoin is currently estimated to be around 2.55 gigawatts and can grow as high as 7.67 gigawatts in the future. This would put Bitcoin’s energy usage on par with Ireland (3.1 GW) and Austria (8.2 GW). At the end of the article, he cites the Bitcoin Lightning Network as a possible solution.
Throughout the research article he walks the reader through his calculations and assumptions, which are much too extensive to cover in full in this article. However, in summary, due to the decentralized nature of cryptocurrencies, he has to back out numerous values from stated energy performances and production levels of ASICs from their manufactures, efficiency estimates, average costs of electricity, and Bitcoin transaction data. He has collected known data from the few sources available and made relatively conservative estimates and assumptions where necessary.
Energy use estimates compared relatively
Dash Force News talked with Darren Tapp, who is a Dash Core Researcher, about the research article. Darren went through the math quickly and discovered that, for the most part, the math checks out displaying that the Bitcoin network does consume a lot of energy. During his calculations he got 61.32 TWh for each year, which is similar to the Digiconomist website of 69.11 TWh for each year. Darren added that “if the whole network was run on S9 miners then the Bitcoin network would use half of this power”.
During economic analyses, it is prudent to ask ‘compared to what’ since all value is subjective, including electricity. Comparisons can be made to the traditional banking industry, which is what Bitcoin and cryptocurrencies are trying to replace. Some estimate the world banking industry to consume around 100 TWh per year, which can increase further as more minute details are added. This makes Bitcoin’s energy consumption still less than the world’s banking industry. Darren posited that the Bitcoin network could increase its energy consumption as it grows to replace traditional financial institutions, but could then shrink its energy consumption as the mining rewards continue to be cut in half.
Despite some concerns about energy consumption, cryptocurrencies are still around because consumers are choosing to pay for electricity to operate these networks, which demonstrates the desire for cryptocurrencies. Darren eloquently discussed the success of cryptocurrencies and the bright future outlook it has.
“Cryptocurrencies are relatively new. It’s really great to have a successful launch that we have seen this past decade. After [further] study, there could be other ways to increase the efficiency and security of these networks. The fact that we’re still talking about this topic a decade later is a testament to the value that can be provided.”
As with most market goods, as costs increase, new solutions and substitutions will be discovered in the market. Just as there were alarmist concerns about the IT energy usage of the 1990s, analysts had made too many linear and exponential growth assumptions and did not account for technological efficiency improvements. The cryptocurrency environment moves at lightning speed so it is not out of the question that the cryptocurrency market will discover a way to balance its desires.
Dash is part of that evolution
Darren did some more math for Dash and discovered that Dash consumes around 788,400,000 kWh/year (0.788 TWh/year), which is much less than Darren’s estimate of Bitcoin’s energy usage at 61,320,000,000 kWh/year (61.32 TWh/year). He said that “[b]ecause only half of the mining reward and fees go to the miners, we expect Dash will consume under half the amount of power of Bitcoin or Bitcoin Cash would consume under a similar use case”. This demonstrates that Dash, has been, and is committed to innovating upon current blockchain technology.
Dash is structured with key stakeholder incentives between the masternodes, miners, and treasury to encourage community driven innovation. A prime example is the ability for the masternodes to assign agency to the Dash Core Group to become paid developers to professionally maintain and improve the blockchain. This has allowed Dash to upgrade smoothly in the past and will feature more innovations with the Evolution platform in the near future. There are also numerous other community innovations, outreach events, and platform integrations that Dash has done because it is what consumers desire. As consumers in the marketplace reveal their desires, whether it is more efficient energy usage or not, Dash is well positioned to adapt to satisfy those desires.
