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Rational mining limits Bitcoin emissions

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matters arising
https://doi.org/10.1038/s41558-019-0533-6
1University of Lyon, Lyon, France. 2CNRS, GATE Lyon Saint-Etienne, Saint-Etienne, France. e-mail: houy@gate.cnrs.fr
The Bitcoin network is criticized for its energy consumption1. Mora
etal.2 estimated that the 2017 carbon footprint of Bitcoin was 69 Mt
of CO2-equivalent (MtCO2e). We criticize the inclusion of unprofit-
able mining rigs in their analysis—as a consequence, they highly
overestimate emissions.
Energy consumption in the Bitcoin network results from the
process of validating transactions. In the Bitcoin protocol, transac-
tions are included in ‘blocks'. For Bitcoin users to reach a consen-
sus on their order and content, blocks need to be published with
a proof of work; that is, a cryptographic proof that enough power
has been consumed to issue the current block. Miners (the agents
issuing blocks) are rewarded for their work. In 2017, the total earn-
ing by the miners was approximately 800,000 bitcoin (~US$3.4 bil-
lion, calculated using the exchange rate at the time each block was
mined). Given these stakes, and because miners are in competition
for rewards, it is easy to understand why mining is performed by
rational industries with big players optimizing the parameters that
influence their earnings.
When evaluating the energy consumption of the Bitcoin net-
work, the main source of uncertainty comes from the hardware
used. Today, mining is performed by application-specific integrated
circuit (ASIC) miners3. In their estimation, Mora etal.2 model the
hardware used by the Bitcoin miners as an average of a list of 62 ASIC
miners. Considering the price of electricity and the value of Bitcoin
for each block, we can see how this assumption is not realistic: a
rational miner would have turned off 14 of these 62 ASIC miners
more than 99% of the time, and only 12 of the 62 ASIC miners were
profitable over the whole year (see the Supplementary Information).
On average, the ASIC miners mentioned in Mora etal.2 were prof-
itable only about 42.5% of the time. Without applying any profit-
ability constraint, we compute that miners would have lost at least
US$3 billion in 2017 (US$3.4 billion in revenue minus US$6.4 bil-
lion spent on electricity, not accounting for hardware fixed costs).
When we remove the unprofitable (and thus also the most ineffi-
cient and polluting) hardware for each block, miners are found to
be profitable (US$1.4 billion spent on electricity for a profit of US$2
billion profit, not accounting for fixed costs). The resulting estima-
tion for the 2017 carbon footprint of Bitcoin is then 15.5 MtCO2e.
Considering the emissions from the least and most polluting hard-
ware among the profitable options for each block, we obtain values
of 2.9 and 35.1 MtCO2e, respectively. From these values, we estimate
that the 2017 carbon emission level given in Mora etal.2 is overesti-
mated by a factor of 4.5 (confidence interval: 2.0–23.9).
Data availability
The data that support the findings of this manuscript are available
in ref. 2 or provided in the Supplementary Code and Data.
Code availability
The code to identify rig profitability and recalculate the 2017 carbon
emissions is provided in the Supplementary Code and Data.
Received: 2 November 2018; Accepted: 19 June 2019;
Published online: 28 August 2019
References
1. Krause, M. J. & Tolaymat, T. Quantication of energy and carbon costs for
mining cryptocurrencies. Nat. Sustain. 1, 711–718 (2018).
2. Mora, C. etal. Bitcoin emissions alone could push global warming above
2 °C. Nat. Clim. Change 8, 931–933(2018).
3. Taylor, M. B. e evolution of bitcoin hardware. Computer 50, 58–66 (2017).
Competing interests
The author declares no competing interests.
Additional information
Supplementary information is available for this paper at https://doi.org/10.1038/
s41558-019-0533-6.
Reprints and permissions information is available at www.nature.com/reprints.
Correspondence and requests for materials should be addressed to N.H.
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© The Author(s), under exclusive licence to Springer Nature Limited 2019
Rational mining limits Bitcoin emissions
Nicolas Houy 1,2
arising from Mora, C. etal. Nature Climate Change https://doi.org/10.1038/s41558-018-0321-8 (2018)
NATURE CLIMATE CHANGE | VOL 9 | SEPTEMBER 2019 | 655 | www.nature.com/natureclimatechange 655
Content courtesy of Springer Nature, terms of use apply. Rights reserved
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... In [59], the authors argued that if all mining facilities utilized the highly efficient ASIC-based mining devices as done in the KnCMiner Facility in Sweden, the overall Bitcoin mining process would consume nearly 1.46 TWh worldwide which is much lower than the current estimates of 184 TWh [11], 135.12 TWh [23] and 69.63 TWh [19] for 2021.This discrepancy demonstrates that inefficient mining devices are being used worldwide. Thus, a major contributor of energy consumption is the use of inefficient mining devices [12,14]. ...
... Due to the increasing difficulty of mining, several devices have been used since the introduction of Bitcoin starting from CPU in 2009, to GPU in 2010, FPGA in 2011 and ASIC since 2013 [9]. Table-VI presents these devices along with their hash rates, efficiencies [12], and minimum total energy consumption [14,59]. The total energy consumption corresponds to the amount of energy used when only that type of device is used for Bitcoin mining worldwide. ...
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... In [59], the authors argued that if all mining facilities utilized the highly efficient ASIC-based mining devices as done in the KnCMiner Facility in Sweden, the overall Bitcoin mining process would consume nearly 1.46 TWh worldwide which is much lower than the current estimates of 184 TWh [11], 135.12 TWh [23] and 69.63 TWh [19] for 2021.This discrepancy demonstrates that inefficient mining devices are being used worldwide. Thus, a major contributor of energy consumption is the use of inefficient mining devices [12,14]. ...
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