Why does Bitcoin consume so much power?

Why Does Bitcoin Consume So Much Power
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The power consumption of the Bitcoin network is a much-discussed but often insufficiently understood topic. In this article, we’ll take a closer look at why Bitcoin mining consumes so much power and why that’s not an unfortunate coincidence but a deliberate design choice. It’s a feature, not a bug.

Bitcoin mining is a versatile part of the Bitcoin network. It consumes a lot of power, but for a good reason. After all, a decentralized network does not just happen. It requires people in different parts of the world to use computing power to contribute to it. To help you in your trading journey, you may need to know some of the reputable trading platforms to use. Click Quantum AI Review for more information about the trading platform.

History shows that few people are willing to do that reliably and for a long time without anything in return. That does not offer a good foundation for a sustainable and unruly decentralized network.

To motivate participants to contribute to the Bitcoin network, Satoshi Nakamoto thought they received a financial reward in cryptocurrency: bitcoins.


Satoshi Nakamoto devised a revolutionary distribution model: Proof of Work mining for the issuance of bitcoins. Bitcoins do not arise ‘just out of anywhere. Instead, Bitcoin miners should mine them, a process in which specialized computers (ASICs) use as much computing power as possible to find the next block in the blockchain.

The computing power is used to solve an arbitrary mathematical puzzle. The person who guesses the correct answer can add a new block to the blockchain and receive a financial reward of ( currently ) 6.25 BTC, plus the miner’s fees.

Those who use more computing power than others can guess more often and find a new block more often. To ensure that the issuance of bitcoins on the network, in fact, monetary inflation, is steady and stable, the Difficulty Adjustment Mechanism adjusts the mining difficulty every 2016 block. It takes, on average, about 10 minutes for one of the miners to answer. They guess and thus find the next block.

Miners compete to use as much computing power as possible for a bit reward that is paid out once every ten minutes. These financial incentives ensure that the total computing power of the network grows.

However, computing power is not free. It requires investments, and it takes power to keep the mining equipment running, so mining bitcoins comes at a cost. It was deliberately chosen in the design of Bitcoin. Cost plays a role in determining the market price and adds actual costs to an attack.

This complicated, wasteful, and useless mining process is one of Bitcoin’s most significant innovations. The aim is to ensure the decentralization and security of the Bitcoin network. However, to understand that, you first need to understand how the blockchain works.

The blockchain

The Blockchain

The blockchain is a kind of cryptographic ledger of the Bitcoin network in which all transactions are stored. Satoshi Nakamoto originally called it a “time chain,” but today, we call it a blockchain because it represents a virtual chain of blocks of transactions. All bitcoin transactions that have ever been made are in the blockchain, divided into blocks that are in chronological order.

When bitcoin miners find a new block, they can add bitcoin transactions to it, after which they add the block to the end of the blockchain. However, the space per block is limited, so usually, they add the transactions with the highest miner’s fees as this maximizes their earnings. After distributing the new block through the network and cashing in their earnings, the race starts again to find the next block.

Every new block of the blockchain is linked to the block before it. At the beginning of each block, there must be a small amount of data derived from the block. This process creates a kind of chain in which each block contains a cryptographic piece of DNA from the previous block, all the way to the very first block.

Why does Bitcoin consume so much power?

Anyone can verify whether a block is valid according to the rules, and invalid blocks are rejected. Based on the blockchain, you can therefore see which transactions have been made, determine how many bitcoins each bitcoin address has and check whether bitcoins are not being spent twice.

Sometimes branches of the blockchain arise. For example, several miners find a suitable block simultaneously or shortly after each other. Then two competing chains can arise parallel to each other.

Ultimately, however, one of the two blockchains will grow faster than the other. That is usually the chain where the majority of the miners’ computing power, 51% or more, is mined. Therefore, according to the Bitcoin protocol, the longest blockchain is the real blockchain with two competing blockchains, and the shorter one is ignored. In this way, the consensus is created on the network about the truth.

Energy & Climate

Bitcoin mining consumes a lot of power to secure the network. Almost everyone agrees on that. And in the future, power consumption is likely to increase even more.

However, this is not by definition a climate disaster. After all, it makes a lot of difference what kind of electricity is used. With green electricity, the climate damage is limited. If bitcoin mining also counteracts flaring and stimulates the development of sustainable power plants, it could even positively contribute to climate goals.

There are, therefore, all kinds of initiatives to make Bitcoin ‘greener’, such as Square’s Clean Energy Investment Initiative and the recently announced ‘ green mining pool ‘.

Unfortunately, much bitcoin mining still takes place in places where climate-unfriendly energy sources are used. For example, in some Chinese provinces, bitcoin miners consume energy generated from coal, and in Iran, Venezuela and Kazakhstan, they often burn oil. If bitcoin mining didn’t exist, the same flow was probably just sold to someone else.

Bitcoin mining consumes a lot of power, which seems terrible news for the climate. Yet there are more and more initiatives in which bitcoin mining contributes to the climate objectives—for example, changing oil companies’ highly problematic ‘ flaring ‘ from a necessary and polluting cost item to an economic advantage with a climate-friendly edge.

Thank you for reading!