How Much Power Does Crypto Use? (8 Latest Trends)

With the world’s energy usage reaching over 200 TWh annually, cryptocurrencies are power-hungry monsters that use more electricity than many nations combined. Since mining cryptocurrencies is energy-intensive, their popularity has resulted in a sharp spike in energy usage.

When the token’s value rises, miners are typically compelled to increase output because of the increased energy requirement. Some cryptocurrencies are using greener strategies to address this. For instance, Ethereum intends to use a new consensus method to reduce energy consumption by 99.5%.

While Bitcoin remains notorious for its high energy consumption, not all cryptocurrency tokens use as much energy as Bitcoin. Check out this article to learn how much power each crypto uses.

Editor’s Choice:

• Cryptocurrencies consume between 120 and 240 billion kilowatt-hours, or 0.4% to 0.9% of the world’s annual electricity.
• Bitcoin is the most energy-intensive crypto, with an average annual power consumption of 150 to 160 TWH.
• Ethereum 2.0 reduced electricity consumption by 26.5 TWh.
• Doge’s annual energy usage increased dramatically from less than 0.08 TWh to over 6 TWh.
• In 2019, Ripple consumed 474,000 kWh of power.
• Over 100 TWh, or 0.55% of global power generation, is used by Bitcoin.

Global Power Consumption of Cryptocurrencies

Cryptocurrencies collectively consume 120 to 240 billion kWh or between 0.4% and 0.9% of the world’s annual electricity consumption. This figure is surprisingly higher than the total energy consumption of all data centers worldwide.

Compared to cashless transactions using a credit or debit card, cryptocurrency transactions, particularly Bitcoin, consume more energy and emit more carbon dioxide. Although Bitcoin is a massive energy consumer in online payments, not every cryptocurrency token uses as much energy as Bitcoin does.

Below is a table representing the annual power consumption of the popular cryptocurrencies.

Explore the world of cryptocurrency energy usage and learn the power requirements of these digital assets with this article.

Breaking Down Energy Usage Per Cryptocurrency

As of August 2022, Bitcoin stands out as the dominant player in the cryptocurrency market, with between 60% and 77% of the world’s total electricity usage coming from crypto-assets. Ethereum trails behind with a projected proportion of 20% to 39%. This data emphasizes the energy consumption of the two most popular cryptocurrencies, showing the necessity for sustainable approaches to mitigate their ecological consequences. 

The following section will break down the average energy consumption of popular cryptocurrencies as of 2024.

1. Bitcoin (BTC) is the most energy-intensive of all cryptocurrencies, with over 150 TWh of annual energy consumption.

(Crypto)

Bitcoin is the first and most popular cryptocurrency based on the proof-of-work (PoW) consensus process. As of January 2024, Bitcoin consumes about 141 to 160 TWh of electricity annually. This figure equates to approximately one-third of Texas’s electricity use in 2021 and the whole electrical consumption of New York of 143 TWh.

The Bitcoin market’s high energy consumption stems from its ineffective PoW mining algorithm, which demands more energy as more miners join. With a single transaction using the PoW technique requiring more than 700 kWh of electricity, Bitcoin mining depends on sizable data centers with powerful processors. 

Fun Fact

Although widely used, Bitcoin only has a limited supply of 21 million. Out of this limited supply, 19.6 million are already in circulation, meaning there are only 1.3 million BTC left for mining.

2. Ethereum 2.0 led to a 26.5 TWh reduction in power consumption.

(Coindesk)

Ethereum is the second-largest cryptocurrency by market capitalization and is likewise based on a PoW consensus process. This crypto uses about 26.5 TWh a year, a significant amount of energy even though it is far less than Bitcoin. 

With Etherium’s intentions to move to a more energy-efficient proof-of-stake (PoS) model with Ethereum 2.0, it is expected to use 6.56 GWh of electricity annually, essentially lower compared to the British Museum’s requirements of 14.48 GWh of electricity to keep its lights on for a whole year. 

3. Solana consumes an estimated 11,051,066 kWh or 0.011TWh annually.

(Solana)

The Solana network is designed with excellent performance and energy efficiency in mind. A single transaction uses only 0.00051 kWh, or 1,836 Joules of energy, much less than the 0.0003 kWh, or 1,080 Joules of energy, used by the average internet search.

In contrast to conventional proof-of-work (PoW) systems, SOL employs a novel consensus technique termed proof-of-history (PoH), which attempts to increase scalability and lower energy usage. With 1,196 validator nodes and an estimated 20,000,000,000 transactions, Solana only consumes 11,051,066 kWh annually.

4. Doge’s yearly energy consumption skyrocketed from less than 0.08 TWh to over 6 TWh in 2022.

(Digiconomist)

Dogecoin began as a joke cryptocurrency but has since grown in value and gained popularity. Like Bitcoin, Dogecoin is less energy-efficient than recent cryptocurrencies since it relies on a PoW consensus algorithm. The energy used in each Dogecoin transaction is 0.12 kWh.

Doge’s annual energy consumption has increased from less than 0.08 TWh at the beginning of 2021 to more than 6 TWh at the start of 2022. This figure equals almost nine ordinary, fully charged Tesla Model 3 batteries. The average amount of energy used to conduct a transaction on Dogecoin is due to its restricted transaction capacity.

5. Bitcoin uses roughly 100 TWh or 0.55% of the world’s power generation.

(HBR.org)

Bitcoin Cash is a fork of Bitcoin that tries to increase scalability and transaction speed. Though there are some technical distinctions, it likewise employs a PoW consensus process like Bitcoin. The proof-of-work (PoW) consensus mechanism used by Bitcoin and Bitcoin Cash is necessary to process and validate transactions on their blockchains. Further, it demands a large amount of processing power.

Like Bitcoin mining, this procedure uses a significant amount of electricity.  This amount equals the annual energy consumption of small nations like Sweden or Malaysia. 

6. Ripple used 474,000 kWh of electricity in 2019.

(The Fintech Times)

XRP only uses 0.0079 kWh of energy per transaction, far less than Bitcoin’s significantly higher energy use. This results in over 50 billion kWh of energy saved annually. Ripple’s 2019 internal statistics showed that the company consumed 474,000 kWh of energy annually. 

XRP runs on the Ripple Protocol Consensus Algorithm (RPCA), a consensus mechanism. RPCA only requires a little processing power to reach consensus and uses much less energy than cryptocurrencies that rely on proof-of-work.

7. Tether, with a value fixed at a 1:1 ratio, requires less energy than PoW-based tokens.

(Tether)

Tether is a stablecoin that aims to keep its value fixed at a 1:1 ratio to the US dollar. It runs on several blockchain systems, such as Ethereum and Tron. While Tether runs on blockchain platforms like Ethereum and Tron, which employ alternative consensus mechanisms like Proof-of-Stake (PoS) or Delegated Proof-of-Stake (DPoS), many other cryptocurrencies rely on energy-intensive mining procedures.

This cryptocurrency does not require mining or a lot of computing labor; it usually uses less energy than PoW-based coins. Rather than wasting energy on mining, Tether is focused on making transactions easier and offering a reliable digital currency. This strategy helps lessen the environmental impact and is in line with the growing concerns regarding the energy usage of cryptocurrencies.

8. Given its lower market size, Shiba Inu requires less energy than other cryptos.

(Crypto)                                   

Shiba Inu (SHIB) is based on memes and was inspired by Dogecoin. SHIB uses less energy than other cryptocurrencies because of its meme-based, community-driven structure, early development stage, and smaller market size.

Compared to Bitcoin and Ethereum, SHIB has a lesser network and transaction volume due to its recent and less developed status. SHIB’s blockchain network uses fewer computing resources to validate and process transactions, which lowers the network’s overall energy consumption. 

Now that you are familiar with the average power usage of several popular cryptocurrencies,  the factors influencing these digital assets’ energy consumption will be covered in the following section.

Factors Affecting Crypto’s Power Consumption  

Specialized computers produce cryptocurrency tokens to solve complex puzzles. However, this process generates a lot of heat and demands energy-intensive cooling devices in mining sites. Thus, analyzing important aspects is necessary to understand why cryptocurrencies use a lot of energy.

Here are the factors affecting cryptocurrency energy consumption:

Proof of Work (PoW) 

Proof of Work, or PoW, is the original blockchain consensus technique and is known to require a significant amount of energy. Ethereum 2.0 was created to solve this problem. PoW mining for Bitcoin is forecast to produce 130 MtCO2 and use 300 TWh of energy by 2024. PoW involves miners vying with each other to calculate hashes for new blocks based on processing power, using more resources as mining complexity increases.

Operational Redundancy

Redundancy in operations and traffic significantly contributes to energy usage on non-PoW blockchains. Each network node manages the entire ledger and completes transactions independently, reducing system efficiency and increasing energy consumption. 

Mining Devices

The mining equipment’s efficiency significantly influences Bitcoin’s overall energy consumption. The current high cryptocurrency power consumption levels are caused by the broad deployment of inefficient devices worldwide. However, efficient ASIC-based devices like those at Sweden’s KnCMiner Facility can dramatically cut energy usage. ASIC-based mining computers are the most potent, but their centralized application has raised issues.  

Energy Sources  

The crypto mining energy consumption, especially Ethereum and Bitcoin, is estimated to be close to national emissions levels. This problem is made worse by non-renewable energy sources. While some studies show a considerable reliance on renewable energy for Bitcoin mining, others emphasize the predominance of non-renewable sources, especially in places like China. 

Local and Global Impact of Crypto’s Power Consumption 

The high energy consumption of cryptocurrencies can have various effects on local and global economies. High energy consumption by cryptocurrencies can lead to issues on a local and global scale. This problem includes increased resident energy bills, environmental concerns, and worldwide economic issues like volatile markets and resource allocation challenges.

Continue reading and learn how crypto’s high energy usage affects the local and global economies.

How Does Crypto’s High Energy Usage Affect the Local Economy? 

Cryptocurrency mining activities cause higher electricity demand and energy costs in local communities where mining facilities are located. This issue may burden nearby power systems and infrastructure, possibly resulting in disruptions or power outages.

Below are the effects of intensive energy consumption in the local community:

More Employment Opportunities

Positively, jobs related to cryptocurrency mining operations can be created in locations where they are developed, although these positions might not always be long-term or steady. These jobs can include roles in maintenance, support services, and mining operations. 

Negative Environmental Impact

Local ecosystems, air quality, and public health may all be directly impacted by the environmental effects of excessive energy use, which include rising carbon emissions and environmental degradation.

How Does Crypto’s High Energy Usage Affect the Global Economy? 

Below are several results of high energy consumption in the global economy:

Resource Allocation

The energy, hardware, and labor costs used in cryptocurrency mining constitute an opportunity cost in distribution. These funds might be used for more profitable and environmentally friendly projects, like advancing renewable energy sources or constructing new infrastructure.

Market Volatility

One factor contributing to the market volatility of cryptocurrencies, especially Bitcoin, is their energy-intensive nature. Price fluctuations in cryptocurrencies have the potential to affect investor mood, asset values, and economic stability on a worldwide scale.

Energy Consumption

Global energy demand and carbon emissions are influenced by the significant energy consumption linked to cryptocurrency. This consumption may worsen global environmental issues, including air pollution and climate change, with far-reaching effects on ecosystems, biodiversity, and human health.

Electronic Waste

As obsolete equipment accumulates, cryptocurrency mining, especially with Application-Specific Integrated Circuit (ASIC) miners, contributes significantly to creating electronic waste. The Digiconomist claims that the Bitcoin network produces more than 72,500 tons of electronic waste yearly.

The following section will discuss the environmental effects of crypto’s power usage.

The Severeness of the Environmental Impact of Crypto’s Power Consumption

The power consumption of cryptocurrencies can have detrimental consequences for the environment, particularly in areas where mining activity is concentrated and fossil fuels play a significant role in energy generation. 

As cryptocurrencies gain acceptance and energy consumption, their carbon footprint keeps expanding, worsening environmental damage and climate change.

Carbon Emissions

Mining cryptocurrencies, particularly in proof-of-work (PoW) systems like Bitcoin, necessitates significant processing power derived from fossil fuel electricity. Fossil fuel combustion contributes to climate change and global warming by releasing greenhouse gases into the atmosphere, including carbon dioxide (CO2). 

Bitcoin mining emitted 85.89 MTCO2E (metric tons of carbon dioxide equivalent) from 2020 to 2021, akin to annual emissions from burning 96,210 pounds of coal or 9,665 gallons of gasoline. These emissions cause environmental concerns by contributing to global warming and climate change.

Air pollution

Due to the increased demand for electricity in areas where cryptocurrency mining is common, coal-fired power plants may be used. These plants release particulate matter, sulfur dioxide (SO2), nitrogen oxides (NOx), and CO2. These pollutants exacerbate respiratory ailments, smog formation, and air pollution in the community.

Associated Petroleum Gas (APG), a methane-rich byproduct of drilling for crude oil frequently flared or thrown into the environment, is used to power Bitcoin mining. Using APG has a substantial negative environmental impact because methane emissions intensify environmental issues by contributing to climate change and global warming.

Resource Depletion

To generate electricity for Bitcoin mining, limited natural resources like coal, natural gas, and other non-renewable energy may need to be extracted and used. Degradation of the ecosystem in various ways, such as habitat destruction and water contamination, can result from exploiting and using these resources.

Fossil fuels, particularly coal and natural gas, are vital to the global Bitcoin mining industry but contribute significantly to greenhouse gas emissions. The reliance of Bitcoin mining on fossil fuels not only contributes to environmental degradation but also raises questions about the sustainability of the industry and its long-term effects on the environment.

Ecosystem Disruption

Alternating land uses, dividing habitats, and upsetting species and cryptocurrency mining operations, especially large-scale industrial facilities, can cause havoc to nearby ecosystems. Natural ecosystems may be invaded by the building and upkeep of mining infrastructure, which could result in the loss of ecosystem services and biodiversity.

The carbon footprint of cryptocurrency activities is comparable to that of 190 natural gas-fired power reactors, or 84 billion pounds of coal. Planting 3.9 billion trees, or 7% of the Amazon rainforest, would be needed to compensate for this.

Water Footprint

Many mining enterprises use water cooling systems to control the heat their equipment produces and save on operating expenses. However, concerns have been raised about this approach because some mining farms release warm water into lakes, which may affect the water’s temperature and level of contamination.

Cryptocurrency mining, particularly Bitcoin, requires significant water, which raises concerns given the global water shortage. Surveys warn of possible effects on drinking water supplies, especially in areas like the US where water scarcity exists.

Conclusion

The rise of cryptocurrencies, particularly Ethereum and Bitcoin, has led to a surge in global energy consumption, primarily because of their energy-intensive mining procedures. The increasing energy demand is attributed to factors such as Proof of Work (PoW) consensus methods, operational redundancy, mining equipment efficiency, and energy sources.

There are serious negative effects on the environment, such as a rise in the generation of electronic waste, issues with water footprints, and significant carbon emissions. These problems affect global energy markets, economic stability, environmental sustainability, and local ecosystems. The crypto industry must address these energy concerns to ensure a more sustainable future.

Sources:

• Forbes
• SlickCharts
• Just Energy
• WhiteHouse.gov
• Crypto
• Energy Star
• Just Energy
• Coindesk
• Solana
• Digiconomist
• HBR.org
• TheFintechTimes
• TheFintechTimes
• Tether
• ScienceDirect
• Investopedia
• Investopedia
• Business Today
• Green Peace