Cryptocurrency’s Energy Consumption Problem

This briefing by RMI discusses the environmental impact of cryptocurrency, specifically Bitcoin, and outlines the efforts and challenges associated with decarbonizing the industry. It details the transition of Ethereum to a lower-energy mechanism, the development of accounting frameworks for emissions, and the necessity for Bitcoin to move away from proof-of-work mining or utilize additional renewable energy to avoid hindering climate progress.

• Bitcoin's energy consumption is substantial, with annual estimates at 127 terawatt-hours (TWh), exceeding the energy use of some countries such as Norway. In the United States, cryptocurrency activities are estimated to produce between 25 and 50 million tons of CO2 annually, which is comparable to the emissions from diesel fuel used by US railroads.
• The high energy demand of Bitcoin is attributed to its use of proof-of-work mining algorithms. In contrast, Ethereum reduced its electrical usage by over 99.9 percent by switching to a proof-of-stake consensus mechanism, making a single Ethereum transaction's energy use similar to that of a Mastercard transaction.
• RMI has contributed to industry decarbonization by co-convening the Crypto Climate Accord (CCA) and developing the CCA Accounting Guidance, which emphasizes marginal emissions rates and grid impact over average emissions. RMI also participated in the creation of the Crypto Climate Impact Accounting Framework by the Crypto Carbon Ratings Institute (CCRI) and South Pole to help allocate GHG emissions for transactions and holdings.
• Bitcoin mining faces several decarbonization challenges, including price volatility that may lead miners to seek the cheapest rather than cleanest electricity, and a tendency to rely on existing renewable capacity rather than investing in new, additional renewable energy. To address this, RMI developed the Renewable Energy (RE) Emissions Score to assess the material impact of renewable energy procurement.

APA

RMI (2023). Cryptocurrency’s Energy Consumption Problem. https://rmi.org/resources/cryptocurrencys-energy-consumption-problem/

Chicago

RMI. Cryptocurrency’s Energy Consumption Problem. 2023. https://rmi.org/resources/cryptocurrencys-energy-consumption-problem/.

Wikipedia

{{cite report |author=RMI |title=Cryptocurrency’s Energy Consumption Problem |date=30 January 2023 |url=https://rmi.org/resources/cryptocurrencys-energy-consumption-problem/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2023cryptocurrencys, author = {{RMI}}, title = {{Cryptocurrency’s Energy Consumption Problem}}, institution = {RMI}, year = {2023}, month = jan, url = {https://rmi.org/resources/cryptocurrencys-energy-consumption-problem/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }