Research: Global Crypto Energy Consumption

by Nov 21, 2018

The hardware behind the powerful processing capabilities of the blockchain network is constantly advancing, and so is its energy consumption footprint. 

There are many cryptocurrencies, such as Bitcoin, that operate on a Proof-of-Work (PoW) concept blockchain. This core design-functionality was specified one decade ago from “Satoshi Nakamoto’s” original Bitcoin Whitepaper, 2008 [1].

(I highly suggest anyone technically minded who has not read this open-source Whitepaper, to give it a read. There is a link in the reference) 

With PoW, basically the owners of the machines are submitting their processing hash-rate power to a global decentralized network, and are rewarded in exchange for their contribution to solving the public ledger relative to the overall network’s strength. This naturally invokes a decentralized competitive environment in which various groups can attempt to solve these algorithms and blocks (by competing against each other’s rival hash power and hardware design) in order to attempt to gain the reward of a newly minted crypto-asset. 

Solving most crypto algorithms require large banks of processing power in order to operate. This is why at Crypto Farm, we aim to design robust and modular life cycle facilities to support these machines and their constant engineering change control.

PROPERTIES OF THE ENERGY FOOTPRINT

 

There are a few main factors listed below that contribute to the global crypto energy footprint:

1) Hardware thermal-electrical material efficiencies across all devices

2) Algorithm properties in the semi-conductor design

3) Network difficulty and hash rate

4) Energy source

5) Atmospheric and environmental composition and structure

Number 4 is a big one. Energy sourcing is very important to us at Crypto Farm, we only support building systems that use carbon-neutral energy and have no direct greenhouse gas outputs. Most of these facilities are built cheaply overseas because of easily accessible coal-based generation, which is not good for our environment nor should it become a lasting trend, especially once you realize how much power is being actively consumed by this (revolutionary) technology, and how much it is going to continue to consume. The nice thing about a nuclear energy source as an example, is the only environmental atmospheric outputs from the generation portion are essentially water vapour (steam) – which makes them the ideal crypto energy source best stable and beneficial to our environment.

We have compiled global hash-rate data from several of our (clients only) Application Programmed Interface (API) databases and included our own calculations to estimate the current energy consumption and projections of the entire crypto ecosystem.  The first figure is PoW energy (GW), and the other is comparing PoW demand (TWh) vs. that of Ontario and Canada. All demand data is actual values from 2016 to 2018 YTD [2], and 2019 onward is our projected analysis with ~50% variance. (the calculation is rather simple, yet there are many variables that are hard/ impossible to estimate at this point in time, hence the large uncertainty)

The projections stop at year 2030, simply to keep 2016 within visible scale, as the last Bitcoin asset will be minted in approx. year 2100. Hence our strong belief that this new industry and asset class is just getting started as the new standard store of value and internet trade. Time to start harnessing the power of blockchain – with Crypto Farm!

I will end this post on an interesting theory: that Crypto Farm and founder Adam J. Brooks firmly believe that by 2064 the total crypto-asset energy demand has a chance to surpass that of the total energy demand of the United States.

 

REFERENCE / FURTHER READING

[1] Bitcoin’s original Whitepaper 

[2] Natural Resources Canada – electricity facts

 

Question:  Do you ever think the global crypto power consumption will reach a plateau? We believe this is not the case (at least not for the next century), and we are just scratching the surface. Comment and let us know your thoughts and/or counter views.