How can we estimate a decrease certain for {the electrical} power consumed by Bitcoin’s Proof of Work (PoW) mechanism?
Clearly there is no such thing as a arduous certain, however there are some market legal guidelines at work and I feel it is potential to present an estimation
beneath some assumptions, however surprisingly I’ve not been capable of finding very similar to that.
I in search of one thing that’s simple to clarify to non technical individuals and non economists however provides a tenet what to
anticipate – if seems to truly be 2 or 3 occasions greater than that, that is nice with me.
Let me give a shot for example, hopefully you are able to do higher or phrase it higher.
Whereas it might be tougher to estimate the quantity of power due to various power costs, we’d get an
estimation on the entire amount of cash spent on electrical power for bitcoin POW by evaluating it to the
mining reward which pays for the mining (as of 2023 6.25 BTC each ten minutes, plus some transaction prices.)
That’s an apparent higher certain for the power value, however I feel we are able to additionally
derive a decrease certain from that.
I’ve learn that the
largest expense (about 70%) in mining is power
and that mining is a skinny margin enterprise.
Clearly there may be mining gear, upkeep and taxes, so as an example the precise prices are at most 3 occasions
the prices of {the electrical} power, estimating excessive to play protected.
The margin of the miners could be the distinction of the mining reward and people complete prices.
Assuming bitcoin costs are secure sufficient for some time and chip scarcity ranges out,
new miners would are available till the margin is just too low. If that will lead to, e.g., a margin of 25%, we would have:
world electrical power prices spent on mining > mining reward / 4
And that is
fairly impartial of the mining know-how.
After I calculate with that, I
presently get a ballpark quantity
of 0.1% of the world electrical power manufacturing, which is in line with some estimations
(1,
2.)
Maybe it might be higher to make use of the bottom mining reward charge in the previous couple of months in that method, to cowl value spikes.
What’s your tackle that?
I feel it is essential to even have such a decrease certain to arrange for what’d occur if the bitcoin value
actually goes above $100000, as some suppose, contemplating that the mining reward is proportional to the bitcoin value…