Bitcoin electricity consumption: an improved assessment

An examination of the underlying assumptions behind the Cambridge Bitcoin Electricity Consumption Index (CBECI) has led to its first major revision since its launch in 2019 – a response to evidence indicating a periodic overestimation of electricity consumption (by Alexander Neumueller, Research Lead – Climate Aspects, Cambridge Digital Assets Programme, Cambridge Centre for Alternative Finance).

Abstract:

“This article represents a major revision of our original method to estimate Bitcoin’s electricity consumption. After evaluating feedback from various stakeholders, we decided to comprehensively review our existing methodology to determine whether it needed improving and, if so, devise and test an update that could help address identified issues. To give context to the reasoning we present in the coming sections, we first introduce bitcoin mining and its evolution. We pay special attention to the technological advancement of dedicated mining hardware, colloquially called ASIC (application-specific integrated circuit) miners, and how trends in advancement have changed. Next, we explore an array of data, from US import records of bitcoin mining hardware to industry statistics, and compare it with our previous and updated estimates. To conclude, we summarise the rationale behind the implemented modifications and, by applying them retroactively, detail how they have influenced our historical estimates.

Emerging concepts we have yet to consider but could reasonably be expected to lower our emission estimates include the potential to mitigate methane emissions by mining operations collocating next to oil fields and utilising otherwise flared natural gas, using and subsequently sealing orphaned gas wells, and mitigating methane emissions from landfills, but also extend to other novel concepts such as waste-heat recovery. Other potential benefits that are more challenging to quantify range from mining serving as a potential catalyst for investment in renewable electricity generation infrastructure to providing increasingly important ancillary services to grid operators.”

31 August 2023

Bitcoin electricity consumption: an improved assessment (Alexander Neumueller, Research Lead – Climate Aspects, Cambridge Digital Assets Programme, Cambridge Centre for Alternative Finance)