Thread by @mrauchs

This is the best analysis of Bitcoin's total electricity consumption that I've seen to date. As with any model, some assumptions are debatable, but overall this is some thorough work from Munich.

cell.com/joule/fulltext…

I should specify that this applies to the first part of the paper - estimating Bitcoin's total electricity consumption.

We @CambridgeAltFin are currently working on a real-time electricity consumption index based on a similar methodology that we'll launch in a few weeks.

However, I'm somewhat skeptical about the second part of the paper - i.e. estimating Bitcoin's environmental footprint.

While the chosen approach is interesting (see below), I can see a lot of issues.

The key assumption of the paper (hashers connect to local pool servers) is not necessarily accurate. Moreover, the approximate location of hashing facilities doesn't necessarily tell you much about the energy mix used by a given facility.

This is particularly true for large hashing operations that struck preferential deals with local power stations and are not directly connected to the grid. Average regional power generation figures do not take these settings into account.

This is the main reason why we (currently) refrain from providing estimates about Bitcoin's environmental footprint: there is just not enough data available to make reliable estimates.

In a second stage, we plan to do a bottom-up analysis based on a curated (and continuously-updated) list of actual hashing facilities that includes figures about their real energy mix.

This won't be a perfect approach either, as every method has its limitations. But we think that a bottom-up analysis will result in a more accurate representation of Bitcoin's environmental externalities as opposed to a top-down approach based on difficult-to-test assumptions.

Researchers, miners, energy experts, power station + grid operators, and others:

Please feel free to reach out if you're interested in contributing to this project in one way or another! 🙂

Good review:

https://twitter.com/zorinaq/status/1139439068570193921?s=21