Regularly in the news is the exorbitant energy consumption of Bitcoin. Stating that it is as high as a whole country such as Ireland’s and that a transaction would cost more than a household’s weekly energy consumption. Let us see to what extent this is true and how things stand at Gulden.
All figures mentioned here are dependent on the numbers of users/transactions/miners. Figures are based on data from 3 October 2018.
Bitcoin currently consumes around 60TWh of energy per year. Almost all of this is consumed by the miners. There are also active nodes, but their electricity consumption is negligible compared to the consumption of the miners.
For these 60TWh, the miners receive 657000 Bitcoins per year in return. At the current rate this is worth about 3.7 billion Euro.
To mine one Bitcoin, 91 MWh of energy is needed. If you calculate that with the Dutch household electricity prices, a bitcoin costs 91,000kWh x €0.22/kWh = €20200.
Bitcoins cannot be mined profitably in the Netherlands at this moment, because with a current rate of €5700,- per bitcoin, the miners would run a huge loss. All miners have therefore moved to countries where electricity is very cheap, such as China or Canada.
If you look at the number of Bitcoin transactions of about 110 million per year, one transaction with Bitcoins costs about 840 kWh.
Let’s have a look at Gulden to see what it costs to mine in terms of energy consumption. With a current total hashrate (computer processing power) around 300 GH/s, and a modern Antminer (computer that specializes in mining cryptovaluta) burning about 480 kW of electricity, we can calculate with around 4.2 GWh per year total energy consumption for the Gulden miners.
Each year, 21,024,000 Guilders are mined. That means that every Gulden costs just a little more than 0.2 kWh of energy. In the Netherlands mining one Gulden will therefore cost you around 4.4 eurocent in electricity costs alone. With Gulden’s current price around 2 eurocent, mining in the Netherlands is not a very healthy business case. Here too we see that people have moved to locations where electricity prices are lower.
In addition, for Gulden there are about 1800 nodes (60 watts) online 24 hours a day and about 400 Rasberry PI mini computers for witnessing. However, these computers only consume 4 watts each. It can be said that the total energy consumption with which the current Gulden network is kept running is currently close to 600kW. This is 5.2 GWh of electricity consumption per year.
Gulden now has approximately 1 million transactions per year. We can therefore calculate that one transaction costs 5.2 kWh.
Bitcoin uses a factor of 11,000 more energy than Gulden! And a transaction on the bitcoin network costs a factor 160 more. Furthermore it should be noted that the capacity of the Gulden network is far bigger than the current 1 million transactions. It can handle up to 2 billion transactions per year. Bitcoin on the other hand is with its 110 million transactions already at about 25% of the maximum capacity.
Another fact to consider is that even with this low hashrate and thus energy consumption, Gulden is relatively much safer than Bitcoin. With Bitcoin, acquiring 51% of the network hashrate is sufficient for an attack. To attack Gulden, with its second generation PoW2 blockchain technology, you need to control 71% of the mining capacity and in addiction to that an 71% of the number of Gulden in witness accounts. This means that an attacker will in fact rob a bank where he himself is the largest shareholder/account holder. Good luck with that!