With some rough math Aaron Toponce comes up with an estimate for Bitcoin Mining Rate and Waste:
At $0.15 USD per kWh, that’s $609 spent on electricity per Bitcoin mined. Bitcoin is currently trading at $376/BTC.
Using the ~$600 cost in electricity for current mining rates, Bitcoin would need to go back to the highs of 2013 and 2014 to have a net positive value.
Aaron is very direct in his conclusion:
I would argue that Bitcoin is the worst idea to come out of Computer Science in the history of mankind.
If this depends on the price per Bitcoin, then this conclusion needs to have more flexibility. It may be that we are too early in the history of Bitcoin to write a conclusion.
In terms of overall issues with Bitcoin, I don’t think this one is big enough by itself to kill Bitcoin. Combined with other issues though, it may prove unsustainable over all.
7 replies on “Net Cost of Bitcoin Mining”
My conclusion is made from 2 results- at current rates, we’re spending more money to mine Bitcoin than the return, and the result is a dozen tons of carbon dioxide dumped into the atmosphere on a daily basis. I’m not aware of any other product from Computer Science that is so inefficient (at a loss!) and so environmentally unfriendly than *coin mining.
Right, my point was that this conclusion is based on current values for Bitcoin. If the values doubled or tripled then that would alter the math significantly.
People have a long history of long history of not paying the fully loaded cost of a product. Especially when it comes to the environmental impacts.
His conclusions are also based on a high price for electricity. You can bet that the people currently mining aren’t paying $0.15/kWh, I only pay $0.09/kWh at home and if I was on a commercial plan, I’d be paying even less.
This power company only charges $0.027/kWh
https://www.chelanpud.org/my-pud-services/rates-and-policies
It’s also interesting how much the cost of electricity varies from state to state https://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_5_6_a
Fair enough. Even then, we’re missing the factor of demand. Right now, Bitcoin is still very much a niche product, although it shows some traction of going mainstream. Even if Bitcoin was trading at 3x cost, it needs mass market support. I just don’t see it. I’m hopeful, but skeptical.
I’m just about over the edge on not even being hopeful any more. At least for Bitcoin as it stands today.
If the math looks like:
( 650,000 kWh / 160 Bitcoins mined per hour ) * $0.15 USD per kWh = $609.38 in electricity per Bitcoin minedThen lowering the $0.15 cost of electricity to $0.027 would be:
( 650,000 kWh / 160 Bitcoins mined per hour ) * $0.027 USD per kWh = $109.69 in electricity per Bitcoin minedThen all of the Bitcoin miners need to move to data centers located in Chelan County, Washington 🙂
According to your EIA link, the average industrial rate across the US is $0.0662. That would come out to $268.94. The commercial average is $0.1036, for a per mined amount of $420.88. So Bitcoin could still easily be in the red.
🙂