Song, Y-D;
Aste, T;
(2020)
The Cost of Bitcoin Mining Has Never Really Increased.
Frontiers Blockchain
, 3
, Article 565497. 10.3389/fbloc.2020.565497.
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Abstract
The Bitcoin network is burning a large amount of energy for mining. In this paper, we estimate the lower bound for the global mining energy cost for a period of 10 years from 2010 to 2020, taking into account changes in energy costs, improvements in hashing technologies and hashing activity. We estimate energy cost for Bitcoin mining using two methods: Brent Crude oil prices as a global standard and regional industrial electricity prices weighted by the share of hashing activity. Despite a 10-billion-fold increase in hashing activity and a 10-million-fold increase in total energy consumption, we find the cost relative to the volume of transactions has not increased nor decreased since 2010. This is consistent with the perspective that, in order to keep the Blockchain system secure from double spending attacks, the proof or work must cost a sizable fraction of the value that can be transferred through the network. We estimate that in the Bitcoin network this fraction is of the order of 1%.
| Type: | Article |
|---|---|
| Title: | The Cost of Bitcoin Mining Has Never Really Increased |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.3389/fbloc.2020.565497 |
| Publisher version: | https://doi.org/10.3389/fbloc.2020.565497 |
| Language: | English |
| Additional information: | © 2020 Song and Aste. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY). The use, distribution or reproduction in other forums is permitted, provided the original author(s) and the copyright owner(s) are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms. |
| Keywords: | Bitcoin, proof of work, cryptocurrency, blockchain, mining cost |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices UCL > Provost and Vice Provost Offices > UCL BEAMS UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science > Dept of Computer Science |
| URI: | https://discovery.ucl.ac.uk/id/eprint/10114158 |
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