Will Bitcoin mining consume all the world's electricity by February 2020?

Recently, the continued surge in Bitcoin prices has attracted media attention, and many people are discussing whether Bitcoin is a bubble that is about to burst.

However, most reports have overlooked a more interesting and unexpected consequence of the price increase: a surge in the amount of electricity consumed worldwide to “mine” bitcoin.

How does Bitcoin mining consume electricity?

There is a very basic requirement for mining Bitcoin, which is the use of expensive and power-hungry computer hardware. The Institute of Electrical and Electronics Engineers explains:

Due to the limitations of computer hardware and technological development, the power consumption of Bitcoin "mining" is already high and getting higher. According to Digiconomist's "Bitcoin Energy Consumption Index", as of November 20, 2017, it is estimated that Bitcoin currently consumes 29.05 trillion watt-hours of electricity per year, equivalent to 0.13% of the world's total electricity consumption. While this does not sound like a lot, it means that the electricity consumption of mining Bitcoin is now more than the electricity used by 159 countries individually (as shown in the figure below). More than the electricity consumption of Ireland and Nigeria.

If all Bitcoin miners were considered a country, their electricity consumption would rank 61st in the world.

Here are some interesting facts about Bitcoin mining and electricity consumption:

In the past month alone, electricity usage for Bitcoin mining is estimated to have increased by 29.98%;

If this growth rate continues, Bitcoin mining will consume all the world’s electricity by February 2020.

Global annual mining revenue is estimated at $7.2bn (£5.4bn);

The global cost of mining is estimated at $1.5 billion (£1.1 billion);

How much electricity does Bitcoin mining currently consume in the U.S. (more than the population of Houston)?

How many British people use the same amount of electricity as Bitcoin mining: 6.1 million (more than the combined populations of Birmingham, Leeds, Sheffield, Manchester, Bradford, Liverpool, Bristol, Croydon, Coventry, Leicester and Nottingham), or the combined populations of Scotland, Wales or Northern Ireland;

Bitcoin mining already consumes more electricity than 12 U.S. states (Alaska, Hawaii, Idaho, Maine, Montana, New Hampshire, New Mexico, North Dakota, Rhode Island, South Dakota, Vermont, and Wyoming);

The map above shows which countries currently consume more or less electricity than Bitcoin mining worldwide. The map below shows how Bitcoin mining's energy consumption compares to the energy consumption of various countries (expressed as a percentage).

For example, Ireland currently consumes about 25 trillion watt-hours of electricity per year, so global Bitcoin mining consumes 116% of that, or 16% more than Ireland consumes. The UK consumes about 309 trillion watt-hours of electricity per year, so global Bitcoin mining consumes only 9.4% of the UK's total electricity consumption.

The maps below show electricity consumption in European countries relative to Bitcoin mining: first, electricity consumption in various European countries relative to global Bitcoin mining; second, Bitcoin mining relative to electricity consumption in various U.S. states.

While conducting this research, we thought it might be interesting to compare Bitcoin mining electricity consumption with electricity consumption in various US states. So we created the following graph:

Overall, Bitcoin mining already consumes more electricity than 12 U.S. states (Alaska, Hawaii, Idaho, Maine, Montana, New Hampshire, New Mexico, North Dakota, Rhode Island, South Dakota, Vermont, and Wyoming). Although Bitcoin mining currently consumes only 0.13% of the world's electricity generation, it is growing very fast.

The Bitcoin Energy Consumption Index estimates that electricity consumption has increased by 29.98% in the past month. If this rate of growth continues and countries do not expand their power generation capacity, Bitcoin mining will: first, exceed the UK's electricity consumption (309 trillion watt-hours) by October 2018; second, exceed the US's electricity consumption (3,913 trillion watt-hours) by July 2019; and third, consume all the world's electricity (21,776 trillion watt-hours) by February 2020.

The Bitcoin Energy Consumption Index estimates the total cost of mining Bitcoin at $1.5 billion (£1.1 billion) per year. However, this assumes that Bitcoin mining is done in places where electricity is cheap (an assumption that is not reasonable). With the average retail price of electricity in the US at 10.41 cents per kilowatt-hour, this means that the cost of using 28.05 trillion watt-hours of electricity is $3.02 billion (£2.28 billion). In the UK, the cost is even higher. Even at the lowest price of 10.10 pence per kilowatt-hour, the cost is still £2.93 billion (US$3.89 billion).

Interestingly, Bitcoin’s price growth of over 40% in the last month is higher than the growth in electricity consumption.

This means that the current global annual mining revenue is estimated at $7.2 billion (£5.4 billion). Even at these higher costs, mining is still profitable.