Lennart Ante, Ingo Fiedler

• Bitcoin runs on energy. The decentralized network’s amount of energy consumption has resulted in multifaceted discussions about its efficiency and environmental impact. To put Bitcoin’s energy consumption into perspective, we propose to relate (a) the energy consumption in TWh and (b) resulting social costs in the form of carbon emissions to the Dollar value settled on the Bitcoin network. Both metrics allow to relate and quantify the capacity of Bitcoin as a settlement layer to the network’s energy consumption and resulting carbon missions, or social costs. We find that in early 2021 Bitcoin (a) settles between $2,333 and $7,555 for each Dollar spent on energy and (b) that, on average, a Dollar settled on the Bitcoin blockchain causes in social costs between 0.007% and 0.01%, depending on the estimated energy consumption converted into the costs of carbon emissions. These results help to assess the efficiency, cost and sustainability of Bitcoin and may allow a comparison of Bitcoin with existing settlement base layers such as Fedwire or gold