Clarifying Misconceptions About Bitcoin Mining

One of the major stories swirling in politics right now is that AI and its attendant data centers are driving up energy prices for Americans. Americans protest that data centers allow meetings or the centers themselves across the country. Politicians announce oversight probes into how data centers can drive up prices. Nonprofit group videos on the topic get millions of views. And politicians from both parties are now scrambling to draft legislation that would raise taxes on data centers or find ways to reduce their impact on consumers’ energy bills.

Too often, however, the role of data centers in changing energy prices is unfairly conflated with another emerging technology: Bitcoin mining.

Yet this connection fails at even a cursory glance. There is a difference between using electricity that is abundant and electricity that is scarce. One does not limit resources or significantly affect electricity prices, while the other can cause blackouts and make just keeping the lights on unaffordable. Bitcoin is the former.

The misconception that Bitcoin is an energy hog is not just a few of a few voices in the policy space, but is expressed by bigwigs in Congress and at nonprofit organizations. Senate Democrats have on several occasions over the past few months voiced their concern about crypto-mining as a major contributor to high energy prices, especially Bitcoin, even to the point of asking federal agencies to act. This negative view of energy use of crypto is echoed in even stronger terms by several non-profit organizations, such as Earthjustice. Earthjustice even stated that the state government “shows that the vast majority of prisoners [mining] in the state is powered by fossil fuels.”

The narrative is only reinforced by the mainstream media, which takes the statements of these organizations and political leaders at face value without digging deeper. “Cryptocurrency mining uses huge amounts of power — and can be as destructive as the real thing,” climate columnist Elizabeth Kolbert wrote in the New Yorker, citing severely flawed yet often repeated research that compared Bitcoin mining’s energy use per transaction to that of American households. “Bitcoin mines cash in on electricity — by devouring it, selling it, even turning it off — and they cause tremendous pollution,” says an investigation by the New York Times, which makes similarly flawed comparisons. And just last month, the AP, without noting any supporting data, attributed an unspecified part of the 2.4% increase in US greenhouse gas emissions that occurred during 2025 to the alleged fact that “cryptocurrency mining meant more power plants produce energy.”

But Bitcoin’s energy consumption does not make it a threat. Bitcoin mining is naturally driven by cheap, abundant and renewable electricity. Often this is energy that would otherwise go to waste, or that sees very low demand, and is generated during peak times. This means that Bitcoin mining inherently counterbalances most of the average community’s energy consumption, bringing balance to the network – not stress. In a word, it brings balance to our energy force.

We spent five weeks combing public and private data to better understand Bitcoin’s impact on the grid. Below are our key findings, as well as policy recommendations to ensure Bitcoin mining continues to have a positive impact (read more about our findings and recommendations in this presentation).

Bitcoin mining is energy intensive, but less so than you might think Bitcoin mining is driven by cheap electricity Bitcoin mining often uses more renewable energy.

In short, policymakers should use bitcoin mining as a tool, not a threat. And if you’re worried about crypto having a bad impact on energy consumption, these aren’t the droids you’re looking for.

Bitcoin mining is energy intensive, but less so than you might think

Bitcoin mining is energy intensive by design. It uses a “proof of work” consensus mechanism, which involves servers around the world competing for a number between 0 and 1. If any one entity controls 51% or more of the work that goes into guessing the correct number, they can derail the network. So by requiring significant energy to mine bitcoin, Satoshi Nakamoto made the Bitcoin network more secure.2

However, the amount of energy Bitcoin mining consumes has been overblown, largely because studies estimating its energy consumption have used flawed methods. The World Economic Forum claimed that Bitcoin would consume more energy in 2020 than the entire planet in 2017, for example, when it ended up consuming just 0.046% of the world’s electricity that year. Another popular study claims that Bitcoin mining alone will increase global temperatures by 2 degrees in the next three decades. That study is still frequently cited, despite being thoroughly debunked in peer-reviewed journals.

That the past estimates have proven so wrong should be a sign to observers that their future estimates may also be wrong. But somehow, like a recurring doomsday prophecy that never comes year after year, the Nostradames of Bitcoin energy use still have a healthy flock of devotees.

The most common methodological flaw in studies evaluating the impact of Bitcoin mining is that they estimate energy consumption for Bitcoin per transaction. Bitcoin mining is effectively a competition between powerful computers to guess a specific number, called a nonce, which rewards the winner in Bitcoin. Bitcoin mining’s energy consumption is thus determined by the work it takes to find a nonce, not by the frequency or amount of transactions.

Even the amount of energy used to find a nonce decreases by 50% every few years, which often remains unexplained. Other times, studies assume that energy production is unlimited, and thus the amount of Bitcoin mining is unlimited, or wrongly expect that Bitcoin miners will continue to work even if their operations are not profitable. In fact, Bitcoin mining currently uses about 0.23% of global energy, and is responsible for 0.08% of the world’s carbon emissions. Furthermore, these percentages will decrease. These are the hard mathematical constraints of a fixed-feed network. It was predictable to those with the eyes to see and the ears to listen.

Bitcoin mining is driven by cheap electricity

One big reason why Bitcoin’s impact on the environment is going to decrease is that Bitcoin mining is driven by cheap energy, and cheap energy is often generated from renewable sources. It’s simple economics: Bitcoin miners’ profits are primarily determined by the price of the Bitcoin they mine, minus the cost of the electricity to mine it. Every Bitcoin miner knows their “breakeven price” – that is, the energy price above which their operations become useless. For many miners today, that number is between $100 and $150 megawatts per hour.

Electricity prices tend to peak in the morning before people leave for work, dip in the afternoons, and then peak again in the evening when people get home. This trend is often referred to as the “duck curve” because when you plot it on a chart, it roughly follows the shape of a duck. It is much more profitable for Bitcoin miners to work when there is less demand, in the valleys of the duck curve, than in the peaks, when they may not make any money at all. In fact, many miners shut down completely during the peaks of the duck chart, because otherwise they would be operating at a loss.

This trend is what makes Bitcoin good for the grid. We don’t expect an increase in power consumption in the middle of the day for any reason absent a snow day, an earthquake or some other man-made natural disaster – one that is sure to make the headlines. Bitcoin miners can therefore look at this general trend and change their mining immediately if there are strange events in the power demand levels on a given day. Bitcoin in effect flattens the duck’s back, but also provides a counter-force of demand to these patterns. This is grid stabilization quack in action.