After discovering that its prior model grossly overestimated power use, the Cambridge Centre for Alternative Finance significantly altered its estimate of the energy consumption of bitcoin.
Bitcoin Energy Estimates from Cambridge Centre are Downgraded: The Corrected Index Reflects More Accurate Power Consumption
The research center claimed in a paper released this week that its previous technique, in use since 2019, performed well while mining profitability was low but showed "shortcomings" as earnings rose, particularly in 2021. The prior ranking gave all successful mining equipment equal weight, which resulted in an overrepresentation of older, less effective types when mining was highly profitable.
Evidence reveals that because of this bottleneck, even next-generation gear has to be stored outside of data centers, according to the report. Given that even brand-new equipment was being stored, it stands to reason that mine operators would have already replaced all older equipment with newer models, maximizing every opportunity to raise the general effectiveness of their mining operations.
In order to better account for the disproportionate effect of new, more potent mining rigs on Bitcoin's overall computing power and energy draw, Cambridge claimed it had now incorporated a weighting component into its computations. Additionally, it extended the time between the introduction and use of new technology by two months.
The adjustments reduced Cambridge's projection for 2021 by 15 TWh, from 104 TWh to 89 TWh. Its estimate for 2022 decreased by 9.8 TWh, from 105.3 TWh to 95.5 TWh.
The study concluded, "We are confidence in our estimates and view each update as a gradual step toward strengthening their trustworthiness. Since openness is a core value of our work, we will demonstrate how this update has changed earlier estimates.
Due to the decentralized nature of the network, Cambridge emphasized that its index only provides a rough estimation of Bitcoin's actual electricity consumption. It claimed that additional improvements to its methods are required, along with a greater focus on the threats to the environment posed by mining and ways to address these problems.
What do you make of Cambridge's decision to update its electricity consumption index in light of Bitcoin's energy requirements? Post your ideas and viewpoints on this topic in the comments area below.