Cryptocurrency: An Analysis of Energy Usage

Rifat Emam
December 19, 2023

Submitted as coursework for PH240, Stanford University, Fall 2023

Introduction

Fig. 1: Graph of rated power and market cap percentages, from Table 1. [2] (Image Source: R. Emam)

To understand the environmental impact and efficiency of cryptocurrency, we need to consider the amount of energy the different cryptocurrency networks use for cryptocurrency mining. In this analysis, we are going to calculate the energy efficiency of cryptocurrency. To calculate the annual energy consumption of cryptocurrency, we will use the Rated Power and the total number of hours in the year. [1]

Amount of Energy Cryptocurrency Uses

To determine the energy utilization of cryptocurrency networks for an entire year, we will use the Rated power metric and the number of hours in the year. The Rated Power (kW) metric will tell us how much power the cryptocurrency network needs to work. Similar to how lightbulbs that are brighter use more power, cryptocurrency networks that have higher Rated Power use more power. In a standard year, there are approximately 8760 hours in the year. As a result, we are going to calculate the energy consumption for the top 20 cryptocurrencies using the following equation: Energy Consumption(k/Wh) = Rated Power(kW) × Hours. [2] It is important to remember that we are considering that other factors related to mining such as hardware and efficiency are performing at the theoretical levels. Table 1 is a summary of the energy consumption for power usage of each network. [2]

Name	Market Cap %	Rated Power(network) %	Name	Market Cap %	Rated Power(network) %
Bitcoin	79.69	68.39	Bitcoin Gold	0.09	0.14
Ethereum	9.87	11.46	Decred	0.08	0.35
Bitcoin Cash	2.72	2.44	RavenCoin	0.06	4.32
Bitcoin SV	2.07	1.91	MonaCoin	0.05	0.13
Litecoin	1.68	2.63	Bytom	0.04	0.05
Monero	0.56	3.35	SiaCoin	0.04	0.07
Dash	0.41	0.60	DigiByte	0.03	0.04
Ethereum C	0.39	0.69	Horizen	0.03	0.12
Zcash	0.20	0.78	Komodo	0.03	0.01
DogeCoin	0.15	2.51	Bytecoin	0.03	0.01

Table 1: Top 20 mineable currencies with their algorithms, and rated power of the networks in percentages. [2]

Conclusion

The actual energy consumption of bitcoin is 184 terawatt-hours (TWh) a year. [3] The analysis of the different cryptocurrency networks gives useful information into its potential and energy-efficient practices. Cryptocurrency requires a significant amount of energy. For example, the amount of carbon dioxide emitted by cryptocurrency is 64.18 Mt CO₂. [3] This amount is similar to the carbon dioxide emissions of Oman and Greece. As the use of cryptocurrency increases in our society, It is imperative that we find more eco-friendly practices within the cryptocurrency ecosystem.

© Rifat Emam. The author warrants that the work is the author's own and that Stanford University provided no input other than typesetting and referencing guidelines. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.

References

[1] A. Khosravi and F. Smki, "Beyond Bitcoin: Evaluating Energy Consumption and Environmental Impact Across Cryptocurrency Projects," Energies 16, 6610 (2023).

[2] U. Gallersdörfer, L. Klaaßen and C. Stoll, "Energy Consumption of Cryptocurrencies Beyond Bitcoin," Joule 4, 1843 (2020).

[3] V. Kohli et al., "Energy Consumption and Carbon Footprints of Cryptocurrencies: An Analysis and Possible Solutions," Digit. Commun. Netw. 9, 79 (2023).