Bitcoin mining is often criticized for its significant energy consumption. First, compared to other industries, the usage is not as large as critics claim. Second, it can make use of energy that would otherwise go to waste or be produced by cheap renewable sources in places where there is surplus capacity.
Bitcoin mining is the process of cryptographically securing the Bitcoin network: its state, transactions, and supply of bitcoins (BTC). The process is similar to solving mathematical problems using a network of computers, which protects the Bitcoin database within its global registry (the blockchain).
Data center operators (known as miners) process transactions, group them into blocks, and – in simplified terms – solve mathematical puzzles with graphics cards to receive a reward in the form of a “block” of bitcoins (known as the proof-of-work process). Each block carries a reward in newly created bitcoins. The issuance of these coins was defined at the inception of the network in 2009 and has been decreasing ever since. This predictable monetary policy is mathematically encoded and cryptographically secured by the proof-of-work system.
This process consumes electricity and requires hardware to ensure the network’s security. The goal is to prevent any entity from hacking the system and altering the database – the registry that records the entire network’s transaction history and current state, showing which accounts hold how many bitcoins. For a detailed explanation of this process, see Fidelity’s publication “The Economics of a Bitcoin Halving: A Miner’s Perspective.”
The Declining Bitcoin Block Reward
- 2009: 50 BTC per block
- 2012 (halving): 25 BTC
- 2016 (halving): 12.5 BTC
- 2020 (halving): 6.25 BTC
- 2024 (halving): 3.125 BTC
- 2028 (halving): 1.5625 BTC
Source: LSEG research
According to the Cambridge Digital Mining Industry Report (May 2025), published by the University of Cambridge Center for Alternative Finance, the bitcoin mining sector is expanding at a rapid pace. Critics argue that mining, essential for securing the network and enabling crypto transactions, consumes massive amounts of energy. Yet in 2021, the total electricity usage of the Bitcoin network accounted for less than 0.1% of global energy consumption.
Today, the Cambridge Bitcoin Electricity Consumption Index (CBECI), the most widely cited source, estimates annual usage at around 138 TWh. That equals roughly 0.5% of global electricity consumption in 2024 – comparable to the annual usage of Poland or to the energy consumed by AI in data centers worldwide in 2025. While substantial, this energy expenditure secures a clear market value and meets demand from participants.
By contrast, the ICT sector – including data centers, communications networks, and user devices – consumed about 5% of global electricity in 2020, rising to over 1,000 TWh by 2023.
Traditional banking systems (SWIFT, IBAN, and legacy networks), with tens of millions of employees, office buildings, payment servers, and settlement infrastructure, use far more human and energy resources than Bitcoin.
Moreover, like software in other industries, Bitcoin improves efficiency, reduces staffing needs, and cuts reliance on physical equipment and real estate tied to legacy infrastructure.
Climate Policy vs. Network Utility
Critics of mining highlight climate change concerns, aligning with the EU’s decarbonization policies (which some argue cause deindustrialization). Yet they overlook the benefits of a network securing over $2 trillion in Bitcoin market capitalization – functioning as a settlement currency, a store of value, and a medium of exchange. For hundreds of millions of users, Bitcoin fulfills at least one of these roles, creating a technological system with the potential to replace global interbank settlement systems like SWIFT.
A significant share of the energy used for mining comes from resources that would otherwise be wasted: renewable surpluses, natural gas flared during oil production, and methane from landfills. Mining can operate anywhere with cheap energy and internet access, naturally directing demand toward “stranded” energy resources that are otherwise unusable.
Thus, Bitcoin mining supports renewable energy (RES) development in two ways: by monetizing surplus production and by creating demand for RES technologies and investments in remote, off-grid areas. Mining adjusts energy consumption based on availability, helping stabilize grids with a high share of renewables.
The U.S. has become the world’s largest mining hub (75.4% of global output; Canada accounts for just 7.1%). Natural gas provides the largest single share (38.2%), while renewables combined account for a majority of the mix (52.4%). Mining centers use hydropower (Bhutan, Norway), geothermal energy (Iceland, El Salvador), and solar/wind during production peaks, when prices fall below profitability thresholds. Nuclear energy benefits as well, since mining provides stable baseload demand, improving the economics of reactors. In Texas, mining centers even shut down during peak demand, while using natural gas that would otherwise be wasted due to the lack of pipelines.
This model makes Bitcoin mining an optimization tool for the energy sector. It already finances RES projects that would be unprofitable without stable offtakers – such as remote hydropower plants or wind farms that would otherwise need curtailment.
Interestingly, a new frontier is emerging in near-Earth orbit (space data centers). Electricity generated by solar panels in space can be “converted” into bits transmitted to Earth, while mining hardware benefits from natural space cooling. This creates synergies across markets – from finance to renewable energy, natural gas, nuclear, and even space technologies.
Toward Greater Efficiency
Thanks to programmed block reward reductions (halving), the Bitcoin network becomes increasingly energy-efficient over time. As usage and adoption grow, energy consumption decreases relative to its utility. Long-term, Bitcoin will likely consume less than 1% of global energy, even with billions of users worldwide.
So, should we limit the growth of this technology simply because it seems irrelevant to many today? In the early 20th century, the horse-drawn carriage was also considered safer than the “fast and dangerous” Ford T. Is the European Commission’s decision rational, given its recent restrictions on AI investment through the EU AI Act and its decarbonization policies?
Author: Robert Kowalski
Member of the Polish Society of Economists and co-founder of Gyfted. Entrepreneur with experience in the Bitcoin industry in Silicon Valley and at Stanford University.
Source: ceo.com.pl
