Bitcoin versus Gold

Bitcoin’s usefulness as a payment system has never been high due to the network’s inability to process more than seven transactions per second at most, whereas traditional payment service providers like VISA can handle 65,000 transactions per second if needed. This has resulted in the Bitcoin community being increasingly focused on defining Bitcoin as an alternative to physical gold; making it a long-term way to store wealth.

Whether this makes sense is an interesting discussion by itself. Any owner of a gold bar can be fairly certain that he or she won’t suddenly receive a similar gold bar created out of  thin air, but things have proven to be more complicated in Bitcoin. Anyone that held one Bitcoin at the start of 2017, and held onto it for the entire year, would have ended the year with at least one Bitcoin Core, one Bitcoin Cash and one Bitcoin Gold. But let’s assume for now that this won’t stand in the way of Bitcoin becoming “digital gold”. Unfortunately, not even becoming digital gold will be enough to make Bitcoin’s sustainability problems go away.

By now, we know that Bitcoin has a serious problem when compared to traditional payments systems in terms of energy consumption and environmental impact. One Bitcoin transaction requires the same amount of electricity as an average household uses in a month or more (in most developed countries). That’s several thousands of times more than what’s required by traditional payment systems. Comparisons of Bitcoin to gold are, however, still scarce, and certainly not available in any live data feeds.

To get started with the previous we can first compare the total amount of energy consumed by gold mining versus the total amount consumed by Bitcoin mining. While looking at these numbers, it’s important to keep in mind that in Bitcoin, mining is essential for the creation of new blocks, and thus for keeping the system running. The high costs involved in this process are an important part of what keeps the system secure. Mining for gold doesn’t serve a similar purpose (and can be stopped at any given time).

Energy Consumption

The data for Bitcoin’s energy consumption is available from the Bitcoin Energy Consumption Index. For completeness, we also include a minimum limit for Bitcoin’s energy consumption based on the current network computational power. For gold, we assume an energy consumption of 132 terawatt-hours per year.

BTC Mining

170.12 TWh

of electrical energy is used to mine Bitcoins every year.
Gold Mining

132 TWh

of electrical energy is used to mine gold every year.

Based on this chart it can be established that Bitcoin mining can actually compete with gold mining in terms of energy consumption, but this only tells half the story. After all, the total value of all the gold mined (well over $100 billion) also still significantly exceeds the total value of all the Bitcoin being mined.

Annual BTC Mining Revenues


Total value of Bitcoin mining rewards (including fees) per year.
Annual Gold Mining Revenues


Total value of gold mined per year.

A more appropriate way to compare the two would therefore be to consider the energy requirement per equal amount of value produced. The next chart shows how it looks like when the average electricity consumed to generate one Bitcoin is plotted against the average energy consumed to mine one Bitcoin worth of gold.

Mining One Bitcoin

974,013 kWh

of electrical energy is used to mine a single Bitcoin.
One BTC Worth of Gold

44,462 kWh

of electrical energy is used to mine a BTC worth of gold.

Interestingly, the chart reveals that even in the most optimistic case, Bitcoin mining is actually more energy-intensive than gold mining. Given a more realistic number, the difference increases fast.

Carbon Footprint

On top of this, we can find that the process of mining Bitcoin isn’t just more energy-intensive, but also has a bigger environmental impact. To reach that conclusion, we first need to estimate the carbon footprint for both. For Bitcoin we can, again, get this number from the Bitcoin Energy Consumption Index. For gold, we assume a carbon footprint of 19 tons of CO2e per every kilogram of gold mined (based on a total footprint of 81 million metric tons of CO2e).

Mining One Bitcoin

543 tonnes

of emissions are emitted for every Bitcoin mined.
One BTC Worth of Gold

27 tonnes

of emissions are emitted for every BTC worth of gold mined.

Again, the result doesn’t look good for Bitcoin even in the most optimistic case. The carbon footprint is huge for both, considering that the average global carbon footprint per household is approximately 10 tons of CO2e per year, but Bitcoin is the clear “winner”. This means that when you’re deciding whether to hold physical gold or Bitcoin, gold might just be the greener option, and it has the added benefit that it will continue to function even if mining stops completely.

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