ING is calling this a “Mad Max Problem”, perhaps a reference to beyond Thunderdome’s plot surrounding power generation in a post apocalyptic world. Teunis Brosens, a Senior Economist with ING, says Bitcoin transactions, and crypto in general perhaps (ETH is more efficient), are more expensive than you think. In fact;
Powering the entire Bitcoin blockchain currently, costs over 2200MW which is more than what the biggest Dutch energy plant, the Eemshavencentrale requires.
Eemshavencentrale is a coal / biomass burning power plant in the Netherlands if you need to know.
Brosens compares Bitcoin to something more mundane like using a credit card which needs far less power to transact;
“Bitcoin’s energy costs stand in stark contrast to payment systems that have the luxury of working with trusted counterparties. E.g. Visa takes about 0.01kWh (10Wh) per transaction which is 20000 times less energy.”
To process a single Bitcoin transaction, 200kWh of electricity is used.
So who is paying for all of this? Well for miners it is a no brainer;
“At current BTC prices, the block reward clearly and vastly outweighs electricity costs. Mining is a no-brainer for individual miners, but the benefit to society at large is much less obvious.”
Maybe Elon Musk can fix this one? Let’s add it to his task list.
ING Report is available here.