Don't panic about Bitcoin's energy consumption

A new International Energy Agency analysis provides a useful look at a tricky problem: tracking the energy consumed by digital Bitcoin "mining" to process transactions.

Why it matters: Growing use of cryptocurrencies is spurring fears that power-sucking hardware and data centers (and associated cooling and lighting) will make it even harder to fight global warming. The IEA primer is a helpful comparison of the conflicting estimates piling up and offers some big takeaways on Bitcoin energy use: Yes, it's a substantial amount and, no, it's not the apocalypse at all.

What they did: IEA analyst George Kamiya looked at one widely used estimate on the higher end, which is Digiconomist's Bitcoin Energy Consumption Index.

• He then offers a more conservative "benchmark," which assumes use of the efficient Antminer S9 hardware but does not factor in cooling and lighting, and then plots where various studies fall.

By the numbers: The IEA analysis estimates that Bitcoin mining consumed around 45 terawatt hours (TWh) last year, but it's on track to be "much higher" this year.

• For a sense of scale, IEA estimates that global electricity demand overall grew by 900 TWh last year.
• But Kamiya also cites analyses showing much of the mining is in countries with lots of renewable electricity or in renewables-heavy regions of China.

The bottom line: Don't panic!

• "Based on these analyses and data from IPO filings of hardware manufacturers and insights on mining facility operations and pool compositions, bitcoin mining is likely responsible for 10–20 Mt CO2 per year, or 0.03–0.06% of global energy-related CO2 emissions," he writes.

But, but, but: Bitcoin energy use is growing, and it's just one cryptocurrency. Even there, estimates vary considerably, there are competing methods, and it's not a static thing either.

• The amount changes depending on the rate of mining and equipment used.
• Looking forward, there are variables around efficiency of the mining tech, where data centers are located and what powers them.

What's next: "While these early estimates provide a rough indication of bitcoin energy use today, it is clear that researchers need more data, in particular from mining facilities, to develop more rigorous methodologies and accurate estimates," Kamiya writes.

Go deeper: No, Bitcoin won't destroy our climate by 2033