The Energy Use of Bitcoin

The goal of the project on Bitcoin`s energy consumption is to provide an objective analysis from economic, technical, and ecological perspectives. It aims to clarify existing myths and misconceptions while developing substantiated recommendations for the sustainable use of Bitcoin and blockchain technology in general. As the largest cryptocurrency, Bitcoin consumes considerable energy through the Proof-of-Work (PoW) process. Public opinion is divided: critics consider the energy use as wasteful or environmentally harmful, whereas advocates argue that Bitcoin contributes to promoting renewable energies. However, a comprehensive, scientifically-based analysis that integrates various perspectives has been lacking. This project will specifically address the following four key research questions: Why does Bitcoin require so much energy? This research stream will examine the reasons for Bitcoins energy needs and the consequences of possible reductions. How is Bitcoin related to energy? This includes analyzing whether alternative consensus mechanisms (such as Proof-of-Stake) could secure Bitcoin and what factors determine energy consumption. This also involves an in-depth investigation of consensus mechanisms used in other blockchains. What positive environmental effects can Bitcoin and blockchain technology in general have? Part of this research will focus on whether and how Bitcoin and blockchain can promote the use of renewable energies. What negative environmental impacts does the energy consumption of Bitcoin and blockchain have in general? This will cover environmental impacts such as CO2 emissions, electronic waste, and local burdens on affected regions. The project will employ a multi-method approach, including literature reviews, surveys, simulations, and scenario analyses. Qualitative and quantitative data collection will provide a comprehensive picture, and scenario analyses will be used to model the long-term effects of Bitcoins energy consumption. The innovative approach of this study lies in the systematic integration of economic, technical, and regulatory perspectives. Often, aspects in the debate are presented in a simplified way, such as comparisons of Bitcoins energy consumption with that of countries or financial systems. This project aims to provide a nuanced basis and also examines the impact of technological and regulatory changes. The research results can support regulatory decision-making and will be published in renowned academic journals and practitioner outlets. Furthermore, international partners will be involved to establish a solid foundation for the sustainable development of blockchain technology and ensure a high level of public awareness.