TUM team finds Bitcoin accounts for 2/3 of total energy consumption of cryptocurrencies – Green Car Congress

Researchers from the Technical University of Munich (TUM) have analyzed 20 cryptocurrenciesaccounting for more than 98% of the total market capitalization of cryptocurrenciesand found that Bitcoin accounts for 2/3 of the total energy consumption of cryptocurrencies. Understudied cryptocurrencies represent the remaining 1/3. Their paper is published in the journal Joule.

Bitcoin is a digital currency based on a cryptographically secured distributed ledger; it is the first and best-known blockchain application. Bitcoin relies on a computationally intensive validation process called mining that requires specific hardware and considerable amounts of electricity to reach consensus about ownership and transactions.

Estimates of Bitcoin energy consumption based on different methodologies and assumptions, 20172020. Energy consumption is presented in gigawatt (GW). Gallersdrfer et al.

However, the authors note, most studies have been focusing exclusively on Bitcoin and have ignored the more than 500 further mineable coins and tokens. In the Joule paper, the researchers analyze 20 cryptocurrencies, which account for more than 98% of the total market capitalization of cryptocurrencies.

To estimate the energy consumption of cryptocurrencies beyond Bitcoin, we resort to a methodology proposed by Krause and Tolaymatthat employs hash rates of cryptocurrency networks and suitable mining devices. Hash rates measure the processing power; they describe the number of attempts per second to solve a block in the so-called proof-of-work mining process.

Based on the underlying algorithms, current hash rates, and suitable mining devices, we conclude that Bitcoin accounts for 2/3 of the total energy consumption, and understudied cryptocurrencies represent the remaining 1/3. Therefore, understudied currencies add nearly 50% on top of Bitcoins energy hunger, which already alone may cause considerable environmental damage. Including the remaining hundreds of mineable coins and tokens, which account for the 1.77% market capitalization not captured by the top 20, would further increase the share of energy consumption caused by cryptocurrencies besides Bitcoin.

Gallersdrfer et al.

Resources

Gallersdrfer et al. (2020) Energy Consumption of Cryptocurrencies Beyond Bitcoin, Joule (2020) doi: 10.1016/j.joule.2020.07.013

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TUM team finds Bitcoin accounts for 2/3 of total energy consumption of cryptocurrencies - Green Car Congress