Bitcoin has taken the world by storm, and investors are obsessively following the price as it surpasses one milestone after another. But one aspect of the cryptocurrency, and the mining process that maintains it in particular, has been largely ignored: the massive amount of energy it uses.
Digiconomist estimates that the electricity consumed by bitcoin will reach 30.25 terawatt hours in 2017 (estimate as of Nov. 28). According to the U.S. Energy Administration, in August, the average price of residential electricity in the U.S. was 13.19 cents per kilowatt hour. That means bitcoin is using up almost $3.9 billion worth of electricity in a year.
We compared that figure to the annual residential electricity sales of U.S. states to get an idea of the magnitude of bitcoin's electricity consumption. First, a disclaimer: the most recent available electricity sales figures for states are from 2015. We decided to use the figures anyway, since national residential electricity consumption grew by just 0.23% in 2016.
As expected, residents of populous states like California, Texas and Florida consume substantially more electricity than bitcoin does. Even so, the energy that goes towards bitcoin mining is not a negligible portion of those statewide totals.
What is interesting is that compared to less populous states, not only does bitcoin require more electricity – in some cases it exceeds residential consumption by a factor of four or more. Consider Vermont: bitcoin gobbles up a whopping 547% of that state's electricity consumption. The corresponding figure for Alaska is 491%; in Rhode Island, it's 394%.
According to blockchain.info, there are around 817,000 unique bitcoin addresses in existence. Since few users put all of their bitcoin in one address, the number of actual people using bitcoin is even smaller. Tiny Rhode Island, which uses a fraction of bitcoin's energy, has more than a million people.
All that electricity could power a lot of homes. Just a thought.