Sustainability analysis of blockchain technology: Bitcoin energy usage case study

Abstract

The aim of this work was to gain insight and knowledge with the basic concepts of the Bitcoinnetwork and its relation to energy consumption. Precisely, the ambition of this literature-based research was to identify key determinants of the network ́s energy intensiveness. After an extensive review of the relevant literature on the topic, key principles of Bitcoin ́s electricity consumption were derived.With regards to environmental sustainability concerns, it was found that the network ́sproperties, in theory, allow for improvements of the unit economics of renewable energy production facilities and renewable intensive energy grids. Such applications, however, are dependent on the unforecastable market dynamics of the Bitcoin price.In a contextualization approach it was attempted to categorize the electricity consumption levels of the Bitcoin network based on the services offered with similar but not comparable entities.This approach finds that energy consumption does not provide a conclusive and instructive comparative parameter to determine whether energy consumption levels of the Bitcoin network.The paper concludes with advocating for location dependent policy approaches that encourage the strategic deployment of Bitcoin mining hardware to minimize environmental and economic opportunity cost.