Claudio Koller ยท 3/23/2023

Is Bitcoin a Waste of Energy?

The criticism about bitcoin's energy consumption is completely justified at first glance. It cannot be denied that bitcoin causes a very high energy consumption.

The relevant question here is whether the energy required can be called wasteful. In doing so, one must understand what the energy is needed for in bitcoin in the first place and what energy is in the first place.

Energy is not wasted

The narrative of the mainstream media is that bitcoin wastes too much energy. Contrary to popular belief, energy is not wasted, it is converted.

The first law of thermodynamics, also known as the law of conservation of energy, states that energy can neither be created nor destroyed in a closed system, but can only be converted from one form to another.

Energy can neither be created nor destroyed. It can only be transformed from one form into another. In this process, the amount of energy in a closed system remains constant, but the usable portion of the energy varies depending on the transformation. Since Einstein's theory of relativity, we know that energy can be converted into matter and vice versa.

Wasted Energy is subjective

Bitcoin enthusiasts defend bitcoin's current and future energy use, seeing it as an acceptable price for a decentralized, peer-to-peer, trustless, censorship-resistant, immutable, and borderless monetary system. They argue that bitcoin offers an alternative to the current fiat and banking system, which also consumes enormous amounts of energy. Moreover, it is impossible to determine how much energy the (petro) US dollar consumes.

The main problem with traditional currencies is the trust required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of violations of this trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve. We must trust them with our privacy and trust them not to allow identity thieves to debit our accounts.

Satoshi Nakamoto, February 11, 2009

The proponents of the current monetary system who benefit from it will most likely fail to see the added benefit of bitcoin to society and instead view cryptocurrency as a waste of energy.

For this reason, central banks, banks, and government institutions in general do not have much enthusiasm for bitcoin. They likely see bitcoin as a threat to the traditional financial system and view its decentralized architecture as a challenge to their role as authority, third party, and relevance to the monetary system.

It is therefore very difficult to objectively assess whether something is wasting or consuming too much energy.

Energy Consumption necessary as a Security Feature

Energy consumption in bitcoin is not wasted energy, but a crucial security feature that ensures the immutability of the bitcoin blockchain.

The use of energy-intensive computing processes (Bitcoin Mining) ensures that bitcoin's decentralized database and transaction history remains tamper-proof as well as tamper-proof without the need to trust a centralized, higher authority.

Bitcoin's high energy consumption requirements are necessary to protect the network from arbitrary tampering and attack, as it is economically unviable for the network to be attacked. In this way, the decentralization of the blockchain is ensured and trust in the system is strengthened.

While bitcoin's energy consumption should be considered critically, it is important to also consider the critical role it plays in the security of a decentralized system.

Proof-of-work chain is the solution to the synchronization problem and to knowing what the globally shared view is without having to trust anyone.

Satoshi Nakamoto, November 8, 2008

Electricity Mix used in Bitcoin Mining

Bitcoin mining uses a renewable electricity mix that has a much higher percentage compared to other industries or countries. This is because renewable energy is a cost-effective source of energy for miners to ensure their profitability.

Unlike most industries that are located in urban areas where there is often a lack of (renewable) energy sources, Bitcoin miners often operate their facilities in remote locations and thus do not rely on a specific region.

In these locations, energy supply is generally more favorable due to a high supply of (renewable) energy and lower demand from households and industry.


In conclusion, bitcoin is not a waste of energy despite its high energy consumption. Energy consumption is a necessary security feature for a decentralized blockchain that protects against arbitrary manipulation and centralized decision-making.

It is also important to note that the percentage of renewable energy in bitcoin mining is relatively high compared to other industries or countries and is constantly increasing.

In addition, bitcoin also has the potential to decentralize and democratize traditional financial systems, which may lead to a more efficient and sustainable financial infrastructure in the long run.

Although there is room for improvement, it is important to consider bitcoin's energy consumption in the context of its positive impact on society and the economy.

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