Hass McCook

Jan 8, 2019

4 min read

Cost & Sustainability of Bitcoin (Dec 2018) — Executive Summary

All data used in this piece is as at Block 556,416 mined on 31 December 2018 (EoY), the 276th Difficulty Change. Network Difficulty was roughly 5.6 trillion. Hash Rate was roughly 40.22 EH/s. Price on the Bitfinex exchange was roughly USD$3,900. The changes in mining ecosystem metrics since the August 2018 edition of this report are shown below:

This story is an updated and abridged version of my report, “The Cost & Sustainability of Bitcoin (August 2018 Edition)[i]”. The reader is asked to refer to the original paper for detailed references and deeper discussion. Future updates will come in this form, and include updates on methods and assumptions as new data emerges.

August 2018 Study — In One Neat Playlist

Changes to Inputs & Assumptions

Changes in Mining Metrics — July to December 2018

Based on the changed assumptions outlined above, the model has estimated the average cost to mine one bitcoin to be roughly $3,750. It should be noted that this research is an inductive, bottom-up estimate, with the intent to provide a ball-park estimate. A sensitivity analysis has also been undertaken to demonstrate range of costs under different scenarios, which shows a realistic range of average mining cost of between $3,000 (driven by aggressive electricity price assumptions), and $4,000 (driven by hash rate increase assumptions). Due to the nature of competition in the Bitcoin mining market, costs that are significantly higher than the market price of Bitcoin can generally be ignored in the short term.

Further, the model has estimated that the Bitcoin Mining Industry exhales 34 million tonnes of CO2 per year — about 0.06% of global greenhouse gas emissions[iii],[iv],[v] (37 Gt CO2 + 16.5 Gt CO2e). Of the 160,000 TWh of energy generated globally each year[vi], the Bitcoin Network chews through about 63 TWh/year (0.04%). It should be noted that all figures include the impact of the ASIC supply-chain, which represents over 50% of all emissions generated.


[i] McCook, H., 2018, “The Cost & Sustainability of Bitcoin (August 2018 Edition)”, https://goo.gl/FgqRjV

[ii] Rauchs, M, et al, 2018, “2nd Global Cryptoasset Benchmarking Study”, Cambridge Centre Alternative Finance, https://www.jbs.cam.ac.uk/fileadmin/user_upload/research/centres/alternative-finance/downloads/2018-12-ccaf-2nd-global-cryptoasset-benchmarking.pdf

[iii] The World Bank, “Total greenhouse gas emissions (kt of CO2 equivalent)”, https://data.worldbank.org/indicator/EN.ATM.GHGT.KT.CE?view=chart, (accessed 21 July 2017).

[iv] Janssens-Maenhout, G. et al, 2017, “JRC Science for Policy Report” http://edgar.jrc.ec.europa.eu/booklet2017/CO2_and_GHG_emissions_of_all_world_countries_booklet_online.pdf (accessed 21 June 2018)

[v] Kilvert, N., 2017, “Paris agreement slipping away as record global CO2 emissions predicted for 2017”, http://archive.li/zpYnW

[vi] International Energy Agency, 2017, “Key World Energy Statistics”, http://archive.is/PFlG3