Cambridge adjusts its consumption index for Bitcoin mining as hashrate rises

The University of Cambridge had to change the methodology by which their Cambridge Bitcoin Electricity Consumption Index (CBECI) related to mining is calculated.

The change was necessary to adjust the estimates to reflect the increase in hashrate and on its distribution. 

The Cambridge Bitcoin Electricity Consumption Index related to mining and the level of hashrate

CBECI estimates the worldwide consumption of electricity generated by Bitcoin mining, and also creates a map showing the countries where there are the highest concentrations of hashrate. 

The latest figure, updated as of 24 hours ago, reveals that the annual consumption of Bitcoin mining is expected to be between 67 and 204 TWh (TeraWatt Hours), which is within a fairly wide range. The precise estimate is 113.22 TWh, or roughly halfway between the calculated minimum and maximum. 

According to Wikipedia data, this is an annual electricity consumption higher than that of the Netherlands, but lower than that of, for example, Argentina or Norway. If Bitcoin mining were a state it would rank 31st in the world. 

It should be noted that this figure varies constantly because it is dependent on the hashrate. The more the hashrate increases the more electricity consumption should increase, but if the hashrate decreases then so does the consumption. 

In addition, when old, less efficient mining machines are replaced by new, more efficient machines, consumption is also reduced.

It is also worth noting that consumption depends on the market value of Bitcoin, because miners only cash in BTC in more or less stable quantities, and they adjust their production costs to the markets value of the BTC they cash in. 

Despite this, the current estimate of annual consumption is close to the absolute highs of 116.30 TWh in February 2022.

Predicting the graph of overall annual consumption, the trend is evidently upward.  

The level of hashrate

Bitcoin mining hashrate recently made a new all-time high. 

The highest peak of the weekly average was recorded only a few days ago, on 18 August, before the difficulty was taken to new highs. 

This also justifies the fact that energy consumption is close to the highs, despite the fact that Bitcoin’s price is still a long way from $69,000. 

In this regard it should be specified that the price of BTC often moves very fast, whereas the hashrate and energy consumption of mining move very slowly. 

In fact, the peak of consumption occurred three months after the price peak, while the hashrate peak almost two years later. 

However, the hashrate is also affected by the efficiency factor, because as machine efficiency increases, hashrate can increase even as the value of Bitcoin declines. 

For example, compared to four years ago, hashrate has quadrupled, while energy consumption has not even doubled. On the other hand, the price is three times higher, but in the meantime there has been the halving of BTC rewards for miners in 2020. 

The hashrate distribution map, on the other hand, is stuck at January 2022. 

The emissions of the Bitcoin network

The CBECI also calculates the level of CO2 emissions from Bitcoin mining. 

Again taking annual estimates as a reference, they range from 2 to 114 MtCO2e (million tons of CO2 equivalent), with the exact estimate at 57.37 MtCO2e. 

Again according to Wikipedia data, this would be a higher level of emissions than Mongolia, but lower than Botswana. 

If Bitcoin mining were a state it would rank 85th, which is much lower than the 31st mentioned above. 

This means that according to the Cambridge Bitcoin Electricity Consumption Index the energy consumption of Bitcoin mining pollutes less on average than all energy consumption in general. 

This is primarily due to the fact that Bitcoin consumes only electricity, as well as the fact that this can also be produced from non-polluting sources, such as hydroelectric or solar power plants. 

This estimate shows that compared to the total 48,928 MtCO2e emitted in the world, Bitcoin mining weighs only 0.12%, which is an infinitesimal and therefore insignificant fraction.