One of the earliest investigations into the energy consumption of the Bitcoin network was conducted by Karl J. O’Dwyer and David Malone, from the Hamilton Institute and Maynooth University in Ireland. In their research titled “Bitcoin Mining and its Energy Footprint” (2014) they concluded that “it is plausible that the energy used by Bitcoin mining is comparable to Irish national energy consumption”. Dwyer and Malone reached their conclusion after considering an array of various mining devices, including ASICs, GPUs and even CPUs. Due to these machines being very different in terms of energy efficiency, the core of their findings was that the total power used for Bitcoin mining had to be around 0.1–10GW. Given that the “average Irish electrical energy demand and production is estimated at around 3GW”, it was established that the entire Bitcoin mining network could be “at par with Ireland for electricity consumption”.
Of course, it is easy to argue that Dwyer and Malone were overestimating Bitcoin’s energy consumption due to the inclusion of (for example) a Core i7 950 (CPU), even though the Block Erupter Sapphir (ASIC) was already available. The latter machine was a 1,000 times more energy efficient, making it extremely hard for a CPU to compete. In fact, the economic break-even point for the Bitcoin mining network a whole was likely a lot closer to 1.5GW than it was to 3GW, when Dwyer and Malone published their work, based on an analysis of historic mining electricity consumption. Any mining activities beyond this point would not have been rational.
That said, the research did provide one of the valuable first insights in the hidden costs of Bitcoin mining, and it seems reality may have finally caught up with their conclusion. According to the Bitcoin Energy Consumption Index the Bitcoin mining network actually passed Ireland in terms of electricity consumption this week, and this time the error margins are significantly smaller. The network’s minimum electricity consumption is now about equal to the maximum consumption in 2014, and the current break-even point for the whole network even exceeds 14GW.
Per processed transaction the former comes down to a whopping 260 kilowatt-hour (KWh) on average. Knowing that an average Irish household consumes 5,300 KWh of electricity per annum, we find that each Bitcoin transaction consumes the equivalent of about 18 days worth of electricity. Altogether this marks a new milestone achievement for the increasingly power hungry network, and it’s unlikely to be the last one.