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I drew a chart juxtaposing the Bitcoin hash rate with the market availability of mining ASICs and their energy efficiency. Using pessimistic and optimistic assumptions miners using either the least or the most efficient ASICs we can calculate the upper and lower bounds for the global electricity consumption of miners.
I decided to do this research after seeing that so many other analyses were flawed. I believe that my market-based and technical approach is superior and more accurate. I split the timeline in 10 phases representing the releases and discontinuances of mining ASICs. See the references and a commentary on the data behind this chart:.
Canaan was very open and transparent thank you! Determining the upper bound for the electricity consumption is then easily done by making two worst-case assumptions. Secondly we assume none of this mining power, some of it being barely profitable, was ever upgraded to more efficient hardware. Now, what about a lower bound estimate? We start with a few observations about the latest 4 most efficient ASICs:.
They currently account for 0. Can we do better than merely calculating lower and upper bounds? I think so, but with the exception of Canaan, 1 other mining hardware manufacturers tend to be secretive about their market share, so anything below are just educated guesses….
So the average efficiency of this added hash rate is likely around 0. BM is close to being unprofitable. RockerBox, A, Neptune have long been unprofitable. Given the apparent high energy-efficiency, hence relatively small percentage of mining income that one needs to spend on electricity to cover the operating costs of an ASIC miner, it may seem that mining is an extremely profitable risk-free venture, right?
Though mining can be quite profitable, in reality it depends mostly on 1 luck about when BTC gains in value and 2 timing of how early a given model of mining machine is put online compared to other competing miners deploying the same machines.
To demonstrate real-world profitability of mining, I modeled the income and costs generated by every single machine model released in the last three and a half years in the following CSV files. Some machines have reached their end of life while others continue to mine profitably to this day. All data as of 11 March Bitfury BFC55 comes in different configurations, model assumes a 0.
Bitfury 28nm comes in different configurations, model assumes a 0. Bitfury BFC16 comes in different configurations, model assumes a 0. KnCMiner Solar comes in different configurations, model assumes a 0. On 27 December day 1 mining starts; electricity represents On 27 January day , after 13 months, electricity represents Some miners may want to already consider replacing the S5 with a more efficient machine. However the halving occurs and drops the reward from 25 to It is practically futile to continue mining past this point.
The S5 should be decommissioned or upgraded. An S5 decommissionned on this day would have spent Over the next few months some days it can make a tiny profit, some days it cannnot.
In the second half of the S5 becomes unexpectedly profitable again thanks to the Bitcoin price increasing faster than the difficulty level. Mining was quite profitable. The model presented in this post makes one assumption: Hypothetically, if a machine is first put online, and if it is immediately decommissioned within the same phase eg.
The worst line never intersects the threshold. The least efficient machines remain profitable during their entire phase of production. We can calculate the upper bound for the global electricity consumption of Bitcoin miners by assuming they deploy the least efficient hardware of their time and never upgrade it.
As to the lower bound it can be calculated by assuming everyone has upgraded to the most efficient hardware. When considering the big picture I believe Bitcoin mining is not wasteful due to the various benefits we extract from it. Lastly, modeling the costs and revenues of a miner over its entire life such as the Antminer S9 or S7 reveals that the hardware cost is greater than its lifetime electricity cost. On 11 March I removed the assumption that sales of A dwindled down to practically zero post-June , because although sales volume did decrease I do not have precise metrics to justify it.
On 30 March I added the comparison to the electricity consumption of decorative Christmas lights. On 4 June I added all miners released in the last 2. The chart covers the period 15 December to 26 February Starting as early as December is sufficient for accurate modeling because only one ASIC released in phase 0 is still profitable: All others are no longer profitable. The daily hash rate data was obtained from Quandl ; the curve was smoothed out by calculating each day as the average of this day and the 9 previous ones.
It is logical to assume miners seek geographical locations with the cheapest electricity. Mining hardware manufacturers only sell one generation of miners at any given time. Usually it is a result of producing and selling small batches one by one, as Bitmain and Canaan have done. But it is also a result of aggressive competition: The profitability threshold in joule per gigahash is calculated as such: Neptune, RockerBox, and A Real-world profits are less than this figure because other costs are not taken into account: An important reason why mining was profitable was simply that BTC gained value.
I reached out to Spondoolies CEO Guy Corem to get official confirmation of when their sales stopped, but have not received a reply so far.
I like it - I've not run the estimates on mining for a while busy with other stuff , but I just found one from about 2 years ago where I'd estimated a best case of MW, and a more likely MW at that point in time.
Do your energy figures allow for just the ASIC characteristic or have you factored other inefficiencies especially in PSUs, cooling, etc. The lower bound, by nature, needs to assume the overhead is zero. Thanks for sharing your analysis. It helped me clear a lot of misunderstandings I had. I reviewed the income-antminer-s5. What is your take on that? Ok, I just found your other article at http: Although my full response to and criticism against Digiconomist is at http: I run the SRSroccoReport.
I see you have had a debate with Digiconomist on the energy consumption and cost to produce bitcoin. I am trying to find out a basic cost of production for bitcoin and ethereum, as I believe this would at least provide a floor for their price.
Can you reply here or contact me at SRSroccoReport gmail. I would enjoy hearing what you would gauge as a current total cost to produce bitcoin and ethereum. I do realize their costs will continue to increase as time goes by, but it would be helpful in comparing cost of production to their market price An Antminer S9 operates at 0.
This doesn't count the cost of the hardware which has to be amortized over the lifetime of a miner. But even this number doesn't account for other smaller expenses: Thank you for sharing! Really enjoyed reading your analysis. I would imagine the global mean is even higher. The problem of estimating Bitcoin energy consumption is a lack of a central register with all active machines. If you're going to derive energy consumption from actual hash you're going to have a pretty big error on the tail.
This is the part with most older machines, that relatively have the most impact on total energy use eg. The author heavily relies on economic assumptions in determining the activity of these older machines, which adds a lot of uncertainty regarding this so-called "bound".
IMO this hasn't been properly disclaimed in the article. Still I'm happy with it, since it also validates the need for an economic indicator given the reliance on profitability assumptions. Yes, but it doesn't disclose uncertainty surrounding that number. Average cost per KWh are an estimate, not a given. Only the lower bound is an actual bound. The way it's presented makes it seem like the upper bound is of equal strenght as the lower bound.
While the lower bound only has some performance uncertainty surrounding it, but the upper bound is a diffent story. It's not that solid. On top of the previous the number is also sensitive to timing after all there's no guarantee to when machines are actually deployed - shipping and setting up take time too and hashrate measurement errors.
Yes the upper bound is influenced by the assumed cost of electricity, and there is some uncertainty about the cost. I disclose this assumption in multiple places. But I do not believe a lower cost would have a significant impact on the tail. Machines produced pre-Dec where my chart starts were produced in relatively small quantities that even their aggregate power consumption is not that high.
What about RockerBox and Neptune?