Calculating Bitcoin energy consumption per transaction is a very flawed metric.

Here’s why.

On 12 January 2009, Hal Finney received 10 BTC from Bitcoin’s creator Satoshi Nakamoto in the first ever Bitcoin transaction.

The block in which this transaction was recorded (block 170) was mined by Nakamoto, with a standard personal computer running the Bitcoin client software.

The transaction was sent from this standard personal computer, to Finney’s standard personal computer. There was no specialized material involved, no mining farm, no “energy burning as big as Switzerland”.

It was just two normal people using normal computers’ CPUs, exchanging data through a normal Internet connection. Peer-to-peer.

The block that included this transaction, and made it immutable and verifiable by anyone (for as long as the Bitcoin network will work), was the same as the blocks mined today. Back then, it gave a reward of 50 new BTC to the miner who discovered it (in this case Nakamoto), and it took approximately 8 minutes to be mined.

That block contains exactly 2 transactions. One was the mining of the 50 BTC subsidy, and the other was the transfer of 10 BTC to Finney and 40 BTC back to Nakamoto change address. 2 transactions, or 3 overall, depending how one looks at it.

A desktop computer uses an average of 181 Watt hours (Wh). This is the computer itself (171 W) and the internet modem (10 W).

Multiplied by two (Nakamoto and Finney), that’s 362 Wh. For the 8 minutes it took to mine this block and make the transaction, that comes to 48.3 Wh for 3 transactions. That is, 16.1 Wh per transaction.

In reality, the transaction didn’t take 8 minutes, merely a few seconds at the most, but for the sake of this comparison, we will count the whole block as it provides the final settlement of the transactions it contains.

If we compare with the Visa network for example, who declares consuming a total amount of 205,555,556 kWh globally for all its operations, and processed 138.3 billion transactions in 2019, that is an average of 1.49 Wh per transaction.

So, on a purely ‘per transaction’ metric, Bitcoin consumes ~10 times the energy of the Visa network, right?

Well, not really. Because the figure presented by Visa only counts what the company consumes, not the computers used by merchants and customers to make the transactions. If we want to compare apples with apples, we should add the computing power and modem consumptions of all participants in the transaction, from the customer to the merchant.

Bitcoin is a peer-to-peer network. There are no intermediaries between the sender and the receiver. On the other hand, Visa is an intermediary, so transactions on the Visa network ALSO consume energy to be sent to and from Visa, from and to the client and the merchant.

If we safely assume the large majority of merchants are receiving their Visa transaction from a standard computer and/or a credit card POS machine (average consumption 100 W), we need to add this extra energy — obviously not counted by Visa for their own operations — to the ‘per transaction’ total. Otherwise we would only be counting one part of one small part of the transaction and ignoring everything that comes before and after.

But that’s not all. There is at least one more computer involved in this transaction. As shoppers know, merchants use the same POS machine whether payment is made with Visa, MasterCard, Amex, or any debit cards. This is because the payment doesn’t go directly from the client to Visa, but first gets handled by a card processor, often a bank or a specialized business renting out the machine to the merchant and handling different card companies.

We suddenly realise that there are more participating computers for one single Visa transaction than for one Bitcoin transaction. Obviously, the Bitcoin transaction must be consuming less energy if it requires fewer machines to process it.

Of course, I do know both network scale differently.

And I also know the computing power of the Bitcoin network varies according to the price of BTC. And that this variation influences the adaptive mining difficulty, further complexifying calculations. And rendering one unprofitable miner suddenly profitable, or the opposite.

I also know that one single Bitcoin transaction can have multiple recipients, essentially multiplying its energy efficiency ‘per transaction’ hundredfold, on the main Blockchain. We are not even talking about ‘layer 2’ systems like the Lightning Network or Liquid.

Environmental impact is not directly connected with energy consumption. And not connected at all to how that energy will precisely be used.

You, me, and even Tesla, are dependant on the energy source that our governments decided to make available to us. For example, how much CO2 does charging your smartphone emits in the atmosphere? And how much CO2 emissions does building one Tesla car produce?

Obviously, the answer will depend on government’s energy grid choices. It doesn’t make sense to compare two identical phones if one is charged by 100% run-of-the-river hydraulic energy and the other one uses electricity from coal. Because even though the two phones are exactly the same, their respective owners did not choose the origin of the electricity they had to consume.

Same logic applies to a Tesla produced in a state favoring and encouraging renewable energy, or one built in a factory using electricity coming from coal.

Furthermore, it would make even less sense to calculate the energy and CO2 per photo or song in the phones’ memory, because their batteries will use the same amount whether the phones are full of data or free space.

Similarly, CO2 emissions from Tesla manufacturing is not impacted by the length of each individual car. A longer model uses more or less the same energy and produces more or less the same CO2 emissions as a shorter one, but nobody would calculate Tesla’s CO2 emissions ‘per inch’.

Deutsche Bank on Twitter:

“Bitcoin’s market cap of $1 tn makes it too important to ignore. But will it evolve into an asset class, or will its illiquidity remain an obstacle? Find out more in the latest instalment of “The Future of Payments” from Marion Laboure.”

«Central banks and governments understand that cryptocurrencies are here to stay, so they are expected to start regulating crypto-assets late this year or early next year. They are also speeding up research on their own Central Bank Digital Currencies (CBDCs) and launching pilots.»

PDF here: https://www.dbresearch.com/PROD/RPS_EN-PROD/PROD0000000000517378.PDF

Consommation d’énergie ≠ empreinte carbone.

67% d’énergie gaspillée rien qu’aux USA selon les sources officielles.

“The 2019 energy flow chart released by Lawrence Livermore National Laboratory details the sources of energy production, how Americans are using energy and how much waste exists.”

Ce n’est pas la consommation d’énergie qui est un problème, mais bien la pollution, souvent engendrée par son gaspillage.

Récupérer une partie de l’énergie perdue, gaspillée, pour optimiser le rendement de sa production, ne génère pas plus de pollution, au contraire. Mieux rentabiliser l’énergie permet plus d’investissements dans son optimisation.

Les consommateurs d’énergie (particuliers et industries, dont Bitcoin) ne peuvent consommer que ce à quoi les gouvernements veulent bien leur donner accès. Politiques énergétiques et régulations brident la consommation finale.

La production d’énergie, sa consommation et son impact sur l’environnement, sont des sujets politiques, et c’est nous citoyens qui devons exercer notre influence sur nos gouvernements pour optimiser et améliorer son rendement de manière respectueuse de notre planète.

Bitcoin n’est pas le problème, mais sa solution.

Source: https://flowcharts.llnl.gov/

China’s National Digital Currency

No, Central Bank Digital Currencies (CBDC) are not at all “similar to Bitcoin”, nor technological progress. A centralised blockchain is just a slow and inefficient database.

First country to launch their CBDC, China merely nationalised WeChat pay and Alipay, with even more centralization and stricter limitations.

Value automatically decreases, funds expire and disappear, can’t send money to friends and family… Central Bank dystopia!

Bitcoin fixes this.

Read full article here: https://www.nytimes.com/2021/03/01/technology/china-national-digital-currency.html

Bitcoin discussed today in Nigerian Senate Plenary

Nation states, especially those not in the West, are facing today a unique opportunity to learn about, embrace, and harness Bitcoin.

Forget Tesla, MicroStrategy, Square, and prepare yourself for sovereign nation states including BTC into their Central Banks reserves.

Today in the Nigerian Senate Plenary:

“We didn’t create Cryptocurrency and so we cannot kill it and cannot also refuse to ensure it works for us. These children are doing great business with it and they are getting result and Nigeria cannot immune itself from this sort of business.” – Senator Biodun Olujimi

https://twitter.com/ngrsenate/status/1359836204955533313?s=21

Senate resolved to:

“Mandate the Committees on Banking, Insurance and other Financial Institutions, ICT and Cybercrimes, and Capital Market to invite the CBN Governor for briefing on the opportunities and threats of the Crypto currency on the nation’s economy and security and to report back findings within two weeks.”