Blog

Professor Andrew Urquhart is Professor of Finance and Financial Technology and Head of the Department of Finance at Birmingham Business School (BBS).

This is the ninth installment of the Professor Coin column, in which I bring important insights from published academic literature on cryptocurrencies to the Decrypt readership. In this article, I discuss Bitcoin energy usage, and the future for sustainable cryptos.

When you hear the words “Bitcoin mining,” you might picture giant warehouses packed with whirring computers, gobbling up electricity like there’s no tomorrow. That image isn’t far from reality.

Since Bitcoin launched in 2009, its proof-of-work (PoW) system has been both its greatest strength and its biggest controversy. It keeps the network secure and decentralized, but it also ties digital finance to very real energy and environmental costs.

Professor Coin: What Gives Bitcoin Its Value?

The go-to benchmark is the Cambridge Bitcoin Electricity Consumption Index (CBECI), which estimates that Bitcoin mining consumes electricity on the scale of mid-sized countries. But here’s the catch: Bitcoin’s energy use doesn’t rise smoothly. Instead, it follows market cycles. When Bitcoin’s price surges, miners switch on more rigs, pushing up hashrate, difficulty, and electricity demand. When prices dip, older or less efficient machines go dark.

Stoll, Klaaßen and Gallersdörfer (2019) pegged annual consumption around 46 TWh back then, with ~22 megatons of CO₂ emissions More recently, new data suggests that consumption has grown substantially.

According to the 2025 Cambridge Digital Mining Industry Report, Bitcoin’s annual electricity usage is now estimated at 138 TWh, with network-wide emissions of approximately 39.8 Mt CO₂e. The same report also notes that 52.4 % of the energy used by miners comes from sustainable sources (renewables + nuclear) as of 2025.

These updated figures help us see that while Bitcoin’s environmental footprint remains significant, the composition of its energy mix is also shifting—offering a more nuanced narrative for 2025.

How Much Energy Does Bitcoin Really Use? Less Than You Might Think

New research asks a broader question: what’s the total environmental cost? A 2023 paper by Chamanara et al. (2023) estimates Bitcoin mining at ~173 TWh, adding in CO₂, water, and land impacts.

Meanwhile, the UN University warned that mining draws heavily on freshwater in regions with scarce supply. And it’s not just the running of machines: de Vries (2021) estimated tens of kilotons of e-waste annually from discarded ASIC rigs, since miners churn through hardware every couple of years. This holistic picture means Bitcoin’s footprint is now seen as multi-dimensional: electricity, emissions, water, land, and waste.

Here’s where the story gets interesting. Not every blockchain guzzles energy like Bitcoin. In September 2022, Ethereum’s Merge replaced PoW with proof-of-stake (PoS). Overnight, its energy use dropped by ~99.9%. Same user experience, radically different environmental profile. This one move showed the world that crypto doesn’t have to be a climate villain.

What is Proof of Stake? How it Differs From Proof of Work

Ethereum’s success has raised uncomfortable questions for Bitcoin. If another major chain can deliver security and functionality without the same energy burn, should Bitcoin follow?

Purists say no: PoW is what gives Bitcoin its incorruptible, apolitical security. Critics counter that clinging to PoW risks political backlash, carbon taxes, or even outright bans in certain jurisdictions.

Not all miners are environmental bad actors. Some argue they are part of the solution, not the problem. In Texas, mining farms strike deals with grid operators, curtailing power when demand spikes. In Iceland and Canada, miners plug into cheap hydropower. Recent engineering research even explores using mining to monetize excess methane from landfills or stranded renewables that would otherwise be wasted.

Elon Musk Gushes About Bitcoin ‘Energy’ Demands—Years After Environmental Gripes

The optimistic narrative goes like this: Bitcoin mining could act as a “buyer of last resort” for surplus green energy, smoothing out variability in solar and wind production. Studies like Hossain & Steigner (2024) and others suggest that, under the right conditions, mining could become an economic driver for renewable projects.

But the jury is still out—whether miners truly accelerate the green transition or just opportunistically chase cheap power depends on location, incentives, and regulation.

So where does that leave us in 2025? Here are the big takeaways:

• Bitcoin’s footprint is real and significant. We’re not just talking electricity, but also carbon, water, land, and e-waste.

• Design matters. Ethereum’s Merge proved that PoS can slash energy costs without breaking a network. Bitcoin, by contrast, has doubled down on PoW.

• Nuance is needed. Not all mining is equal—coal-based rigs in Kazakhstan are very different from hydro-powered farms in Quebec.

• Policy pressure is rising. Expect governments to ask not just “how much power?” but “what kind of power, where, and with what externalities?”

Bitcoin will always carry the energy question with it. Whether it becomes a climate villain or an unlikely green ally depends on choices made by miners, policymakers, and communities in the next few years.

For now, one truth is clear: in crypto, the invisible isn’t weightless. The future of digital money is tied, quite literally, to the power grid.

• Cambridge Centre for Alternative Finance, 2025. Cambridge Digital Mining Industry Report 2025. Cambridge Judge Business School.

• Chamanara, N., Pereira, A.O., Dsouza, C., Pauliuk, S. and Hertwich, E.G., 2023. The environmental footprint of bitcoin mining across the globe. Earth’s Future, 11(11), e2023EF003871.

• de Vries, A., 2021. Bitcoin boom: What rising prices mean for the network’s energy consumption. Joule, 5(3), pp.509–513

• Stoll, C., Klaaßen, L. and Gallersdörfer, U., 2019. The carbon footprint of bitcoin. Joule, 3(7), pp.1647–1661.

• Hossain, M. & Steigner, T., 2024. Balancing Innovation and Sustainability: Addressing the Environmental Impact of Bitcoin Mining. 10.48550/arXiv.2411.08908.

• de Vries-Gao, A. & Stoll, C., 2021. Bitcoin’s growing e-waste problem. Resources Conservation and Recycling, 175. 105901. 10.1016/j.resconrec.2021.105901.