Source: Techopedia
Compiled by: WEEX Exchange
In the fast-paced digital currency world, Bitcoin has become a phenomenon, attracting the attention of global investors. At the heart of this revolutionary cryptocurrency is a process called “mining,” which drives Bitcoin and has a significant impact on the entire blockchain ecosystem. This article will take an in-depth look at Bitcoin mining and energy consumption statistics, and why “mining” is critical to the development of Bitcoin and the environment.
Whether you're a seasoned investor or new to the cryptocurrency world, understanding the ins and outs of Bitcoin mining is essential to grasping the true potential of this digital asset. So let’s dive into the interesting world of Bitcoin mining, shed light on why it’s important, and the key things you need to know.
Bitcoin Mining Statistics Highlights
In May 2023, the annual power consumption of global Bitcoin mining was approximately 95.58 terawatt hours (TWh).
It is estimated that Bitcoin consumes 60%-77% of the global electricity consumption of crypto assets.
Bitcoin mining has a total market capitalization of $8.11 billion.
Bitcoin miners earn $27.7 million per day.
The United States has the largest Bitcoin mining industry in the world, accounting for more than 38% of the hash rate of the entire Bitcoin network.
Bitcoin mining energy consumption statistics
Bitcoin mining energy consumption has become a subject of widespread concern and scrutiny. As Bitcoin’s popularity and value soar, so does the energy required to mine new coins and maintain the blockchain.
According to the New York Times, in the early days of Bitcoin, when its following was limited, a desktop computer could effortlessly mine the cryptocurrency in seconds. Today, it takes about “9 years of typical household electricity usage” to mine one Bitcoin. In May 2023, bitcoin mining is expected to consume about 95.58 terawatt hours of electricity; its annual electricity consumption in 2022 will reach 204.5 terawatt hours, exceeding the electricity consumption of Finland.
Figure 1: Bitcoin mining estimated power consumption, minimum power consumption (TWh/year)
Underscoring the scale of energy use, the total energy consumed by bitcoin mining in the United States will reach 50 billion kilowatt-hours (kWh) in 2022, according to a White House report. Bitcoin mining uses more electricity than all the computers running in the United States combined. Of course, Bitcoin mining itself is also included in the national electricity consumption data.
Figure 2: Comparison of U.S. household electricity consumption and cryptocurrency mining electricity consumption
The above figure shows that the electricity consumption of different household scenarios in the United States from high to low is: refrigeration, lighting, TV, Crypto, computers, fans and water pumps, freezers, washing machines, dishwashers (as of August 2022, Bitcoin is expected to account for 60%-77% of all Crypto electricity consumption, WEEX note)
One Bitcoin transaction requires 1,449 kilowatt-hours of electricity for accounting (mining), which is roughly equivalent to 50 days of electricity consumption by an average American household. In monetary terms, the average cost of 1 kilowatt hour of electricity in the United States is 12 cents, which means that accounting for a Bitcoin transaction requires approximately $173 in electricity bills.
Bitcoin mining consumes approximately 0.5% of the world's total energy, which is more than 7 times higher than the total power consumption of Google's global operations. If the energy consumption of the Bitcoin network is compared with the electricity consumption of various countries, it ranks 34th in the world. (Second only to the Netherlands and higher than Kazakhstan, editor’s note)
Figure 3: Ranking of energy consumption by country
The energy consumption of a single Bitcoin transaction is equivalent to the energy consumption of nearly 100,000 Visa card transactions. In May 2023, Bitcoin's electricity consumption per transaction reached 703.25 kilowatt hours, while the Visa card's electricity consumption was only 148.63 kilowatt hours.
Figure 4: Energy consumption of Bitcoin transactions vs. Visa card transactions
1) How to calculate the energy consumption of Bitcoin mining?
Determining the exact energy consumption of Bitcoin mining is challenging due to many factors, including:
The decentralized nature of Bitcoin mining
Lack of standardized reporting requirements
A dynamic and ever-changing mining landscape
Miners use different sources of electricity
Privacy and Confidentiality of Mine Operations
Accurate estimates of energy use often rely on assumptions, approximations and statistical models based on available data. An infographic published by Digiconomist reveals the challenges of accurately measuring Bitcoin’s energy consumption. Given that the cost of electricity is an important factor in ongoing expenses, the total electricity consumption of the Bitcoin network is closely related to the income of miners.
Figure 5: Steps to determine Bitcoin mining energy consumption
2) US Bitcoin mining farms and energy consumption data
The New York Times lists 34 Bitcoin mining farms, all of which are large in the United States and use a lot of energy. Operating these mines incurs costs, such as increased electricity bills and significant carbon emissions, affecting nearby individuals. Each of the 34 mining projects uses at least 30,000 times the electricity used by the average American household. Together, these operations consume more than 3,900 megawatts of electricity, nearly equivalent to the power consumption of 3 million surrounding homes.
Figure 6: Distribution of large-scale Bitcoin mining farms in the United States
A bitcoin mining farm in Kearney, Nebraska, consumes as much electricity as the 73,000 surrounding homes. A mine in Dalton, Georgia uses as much electricity as some 97,000 surrounding homes. The Riot Platform mine in Rockdale, Texas is the largest electricity-consuming Bitcoin mine in the United States, using as much electricity as the 300,000 surrounding homes.
The Riot mine, located near the Bitdeer mine, consumes more electricity than all homes within a 40-mile radius.
Cryptocurrency miners in Texas have been awarded long-term contracts guaranteeing them deeply discounted electricity prices for up to a decade.
Figure 7: Distribution of Bitcoin mines in Texas
3) Climate change and Bitcoin mining and energy consumption
As of August 2021, the average emission factor of the Bitcoin network is 557.76 gCO2/kWh, with an estimated power load demand of 13.39 GW, and Bitcoin mining may emit approximately 65.4 megatons of carbon dioxide (MtCO2) per year.
The carbon footprint of Bitcoin mining can be estimated based on the source of electricity used by miners. The figure below basically represents the global carbon footprint of Bitcoin mining, which is similar to the emissions of countries such as Greece (56.6 MtCO2 in 2019), accounting for 0.19% of total global emissions.
Figure 8: Carbon footprint of Bitcoin mining
As of May 2021, Bitcoin mining produces approximately 31,000 tons of electronic waste every year. By June 2022, this number has risen to 35,000 tons/year, equivalent to the annual output of e-waste in the entire Netherlands.
For example, Greenidge LLC, a natural gas power plant in New York State, emits approximately 88,440 tons of carbon dioxide equivalent per year when mining behind-the-meter Bitcoin. Assuming that all the electricity generated by a power plant is used for Bitcoin mining, the annual emissions will reach 656,983 tons of carbon dioxide equivalent.
About 79% of total greenhouse gas emissions come from power generation, which is the main source of emissions. If the power plant were running at full capacity, its annual emissions would be equivalent to the emissions from about 140,000 passenger cars, or the emissions from burning 600 million pounds of coal.
4) The benefits behind Bitcoin mining energy consumption
In response to the adverse effects of Bitcoin mining, the Bitcoin Mining Council (BMC)—a global forum composed of mining companies that account for 48.4% of the Bitcoin network’s computing power—revealed that in the fourth quarter of 2022 Operational data shows that renewable energy accounts for 58.9% of Bitcoin mining electricity consumption. This is a significant increase from the 36.8% estimate reported in the first quarter of 2021.
Additionally, a research paper released by the Bitcoin Clean Energy Initiative Memorandum reports that Bitcoin miners are an ideal complementary technology to renewable energy and storage. Other key highlights of Bitcoin mining highlighted in the research paper include:
Bitcoin mining can accelerate the global energy transition to renewable energy.
Bitcoin mining could encourage investment in solar power, while electricity costs may not change.
Bitcoin Mining Market Size and Revenue Statistics
Bitcoin mining, the process of verifying transactions and securing the network, has grown into a highly competitive industry, causing its market size and revenue to grow exponentially. The market has become very profitable, with numerous global players, including individual miners and large-scale mining operators.
At the same time, the price of Bitcoin also exceeded $65,000 in November 2021, setting a new all-time high for the cryptocurrency. As of June 2023, the market value of Bitcoin reached US$597.8 billion.
The maximum supply of Bitcoin is set at 21 million coins. This ensures scarcity and is an important factor in promoting Bitcoin’s value proposition. In March 2023, the number of Bitcoins that have been mined exceeded 19 million, and the remaining number that has not yet been mined is 2 million. Once the 21 million threshold is reached, no new bitcoins will be mined.
This scarcity, in turn, supports the total market capitalization of Bitcoin mining, which currently stands at $8.11 billion.
1) Data of the largest Bitcoin mining companies
A list compiled by CompaniesMarketCap includes the 16 largest publicly traded Bitcoin mining companies by valuation. Among them, Marathon Digital Holdings is the largest Bitcoin miner, with a market value of US$2.27 billion.
Figure 9: Top 5 Bitcoin Mining Companies by Market Capitalization
It is worth noting that this list does not include some other listed mining companies with smaller market capitalizations, as well as many unlisted crypto mining companies.
Canaan is the No. 1 publicly traded mining company by revenue, reporting total revenue of $650 million in 2022. The revenue of Chinese Bitcoin mining companies mainly comes from the sales of Bitcoin mining machines.
Figure 10: Top 5 Bitcoin Mining Company Revenues
In terms of earnings (Earnings, profit before interest and taxes), Canaan Zhizhi is also the number one listed mining company, with a total earnings of US$92.33 million in 2022. In 2021, the company's earnings rose sharply to $300 million, a marked improvement from a loss of $31.2 million in 2020.
2) Bitcoin mining income data
As of June 26, 2023, Bitcoin miners are generating $27.7 million in daily revenue, a massive 52.20% increase from $18.2 million in the same period last year. In April 2021, Bitcoin miners achieved their highest daily income since 2018, reaching US$80.12 million (mainly due to the increase in BTC Gas fees brought about by Ordinals and BRC20, WEEX note).
Figure 11: Changes in Bitcoin miner income
According to Glassnode reports, on June 27, 2023, Bitcoin miners transferred a record $128 million in BTC to the exchange in a single transaction.
Figure 12: BTC data transferred by miners to exchanges
3) Sources of Bitcoin mining income
Miners' income comes from two sources: Bitcoin block rewards and transaction fees.
Bitcoin rewards are earned by miners who successfully mine blocks in the blockchain system. To claim the reward, miners add it to the header of the block.
Approximately every four years, the reward for successfully mining a new block in the Bitcoin network is halved. When Bitcoin came out, the block reward for mining was 50 Bitcoins. As of June 2023, the mining reward for each new block mined is 6.25 Bitcoins, and a new block is produced approximately every 10 minutes. The next halving is expected in 2024 and will reduce the block reward to 3.125 BTC.
Figure 13: Previous Bitcoin halvings
Bitcoin will halve roughly every 210,000 blocks until around 2140 when all 21 million bitcoins are mined. Once the block reward drops to 0, miners will only be rewarded with transaction fees. Users pay transaction fees to have their transactions packaged in the Bitcoin blockchain by miners. Users can also incentivize miners to package their own transactions first by increasing transaction fees.
As of June 28, 2023, the average bitcoin transaction fee was $2.226, up from $1.168 12 months earlier. This figure has the potential to continue to grow, similar to what happened in April 2021, when the peak was near $62.79.
Figure 14: Bitcoin Gas Fee
Bitcoin transaction fees can depend on several factors:
Network congestion
Transaction data size
Confirmation time required
Fee calculations are usually calculated based on the transaction size (in bytes) rather than the transaction amount. As of June 28, 2023, the average block size is 1.69 MB. Miners with a higher hash rate have a better chance of adding new blocks to the blockchain, earning block rewards and transaction fees.
In the context of Bitcoin mining, hash rate refers to the computing power or speed at which a mining device or network can perform cryptographic calculations, known as hashing operations.
Driven by profits and returns, miners often choose which coins to mine based on financial criteria, including factors such as daily reward amounts or the prices of different crypto assets.
Figure 15: Token selection criteria
The computing power index report in May 2023 shows that the average computing power price is $82.23/PH/day (equivalent to 0.00298 BTC/PH/day), which is higher than the average price in April of $77.87/PH/day (equivalent to 0.00270 BTC/PH). /day) rose 5.6%.
Figure 16: Bitcoin computing power measurement unit
In May 2023, miners earned a total of 33,365 BTC (equivalent to $918.5 million), a 20% increase from the 27,743 BTC (equivalent to $800.8 million) earned in April. Of these revenues, transaction fees contributed 4,540 BTC ($125.8 million), a 459% increase from April’s 812 BTC ($23.5 million).
Bitcoin mining country statistics
From major countries such as China and the United States to countries such as Kazakhstan and Russia, different countries have an impact on the complex pattern of global Bitcoin mining.
1) China’s Bit Mining uses hydropower
Before banning Bitcoin mining in June 2021, China was the undisputed leader in computing power provision and electricity consumption, with nearly 50% of the network's computing power. The ban severely affected mining activity from China, resulting in a significant drop in hash rate.
Figure 17: Mining power consumption by country (terawatt hours)
According to the Cambridge Bitcoin Electricity Consumption Index (CBECI), China was the world's largest cryptocurrency mining center at its peak, accounting for 65% to 75% of the global Bitcoin network's total computing power. China's monthly average computing power share dropped from 75.5% in September 2019 to 22.3% in September 2021, a drop of more than 50%.
Figure 18: Evolution of the Bitcoin mining market landscape
During China's summer flood season, some areas are rich in water resources and electricity bills have dropped. Miners take advantage of this and move or expand their operations to areas rich in hydropower resources, such as Sichuan. At the beginning of the wet season in 2020, Sichuan accounted for 14.9% of China's total computing power, and this figure once reached 61.1% at its peak. In contrast, Xinjiang, which mainly relies on coal power, saw its computing power share drop from 55.1% at the beginning of the rainy season to a low of 9.6% during the same period.
Figure 19: Bitcoin mining areas in China
2) US Bitcoin Mining Statistics
The United States is the world's largest Bitcoin mining area, accounting for more than 38% of the total computing power of the entire Bitcoin network. From January 2020 to January 2022, the share of Bitcoin mining in the United States increased significantly, climbing from 4.5% to 37.8%.
Georgia has the highest share of computing power in the country, accounting for 30.8% of the country in December 2021. Texas came in second with a share of 11.2%, and Kentucky came in third with a share of 10.9%.
Figure 20: Bitcoin mining share by state in the United States
The mining cost in Hawaii is $54,862.05 and the profit is -$24,617.20, making it the most expensive state to mine Bitcoin.
The chart below shows the 10 most expensive states to mine one Bitcoin. (In order: Hawaii, Alaska, Connecticut, Rhode Island, Massachusetts, California, New Hampshire, Vermont, New York, New Jersey, WEEX note)
Figure 21: Top 10 mining costs in US states
Louisiana had the lowest cost, with a total cost of $14,955.14 and a profit of $15,289.71.
Figure 22: States with the lowest mining costs in the United States
3) Changes in the global Bitcoin mining landscape
The transfer of Chinese mining has changed the global mining layout, causing countries such as Kazakhstan and Russia to become the main beneficiaries of the reallocation of computing power. According to data provided by the World Population Review, as of 2023, the proportion of computing power in major Bitcoin mining areas is as follows:
United States: 35.4%
Kazakhstan: 18.1%
Russia: 11.23%
Canada: 9.55%
Ireland: 4.68%
Malaysia: 4.58%
Germany: 4.48%
Iran: 3.1%
After the ban, many Chinese miners moved operations to Kazakhstan because of the country's proximity and natural abundance of fossil fuels.
In 2019, fossil fuels accounted for 84% of Kazakhstan's electricity generation, hydropower accounted for 12%, and solar and wind energy installations contributed less than 2%. Abundant coal reserves in Kazakhstan's northern region power more than 70% of the country's power plants.
Kazakhstan's electricity is provided by 155 power plants with different ownership models. As of January 1, 2022, the country's total installed power generation capacity reached 23,957 MW, with an available capacity of 19,004 MW.
Kazakhstan’s share of global Bitcoin mining surged significantly between September 2019 and September 2021, from 1.3% to an impressive 24.3%. The country’s Bitcoin mining business is booming due to coal’s self-sufficiency and energy efficiency.
However, according to a report by the Russian media "Kommersant" in April 2023, Russia has become the world's second largest Bitcoin mining area, second only to the United States.
Russia’s top crypto mining company Bitriver’s data centers are powered by Gazprom Neft, the country’s third-largest oil producer. In order to meet the power needs of crypto mining, petroleum liquefied gas is directly used to generate electricity.
Figure 23: Russian mining company Bitriver
While the US maintains a significant mining lead with 3-4 GW of power supply capacity, Russia's power supply capacity has reached 1 GW in January-March 2023. The change in Russia’s ranking coincides with the implementation of tax and regulatory measures on cryptocurrency mining in the United States at the state and federal levels, making the U.S. mining industry face a less friendly policy environment.
Bitcoin Mining vs. Other Resource Costs
Due to performance challenges, Bitcoin is often compared to "digital gold" rather than a payment system. Therefore, Bitcoin mining can be compared with gold mining.
Approximately 3,531 tons of gold are mined globally each year, resulting in total carbon dioxide emissions of 81 million tons. Comparing the carbon intensity of Bitcoin mining to that of mining physical gold, it’s clear that the former exceeds the latter.
It is worth noting, however, that this calculation includes mining fees, which do not exist in physical gold mining. In addition, it is not advisable to make such a comparison. We can stop mining physical gold, but Bitcoin mining cannot be stopped for a moment. It is an integral part of the entire Bitcoin network.
Figure 24: Gold Mining vs. Bitcoin Mining
Energy costs for resource extraction can vary widely, depending on the specific resource and extraction method. For example:
According to the United States Geological Survey (USGS), copper mining uses 0.2 to 1.5 gigajoules of energy per ton of copper produced (GJ/t), with electrical uses accounting for about three-quarters of the total; Aluminum requires about 17,000 kilowatt-hours (kWh) of electricity, and the electricity needed to produce aluminum typically comes from thermal power plants, which operate at a peak efficiency of about 30%.
In 2021, U.S. electric utilities and independent power generators will each require: 1.12 pounds of coal, 7.36 cubic feet of natural gas, 0.08 gallons of petroleum liquefied gas, 0.82 pounds of Petroleum coke (the vacuum residue of petroleum Oil, through the coking unit, at 500-550 ° C to generate black solid coke, editor's note).
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