BTC’s Power Efficiency Will Rise With Adoption, Says Proponent
In a recent tweet, Lyn Alden, a famous BTC supporter, argued that Bitcoin’s power usage problem is not as big as many people claim or believe.
BTC’s Energy Usage To Become Efficient As Adoption Increases
In a recent tweet, Alden explained that the Bitcoin blockchain would become very efficient as adoption continues. She supported her claim with a screenshot of data from the on-chain analytics platform Glassnode.
The Glassnode report revealed that BTC’s mining rate grows slowly compared to BTC’s transaction volume and market capitalization. Last year, the total revenue realized from Bitcoin mining was about $9.51 billion.
This figure is 1.8% of Bitcoin’s average market cap, which was $535 billion. On the other hand, mining revenue in 2021 reached $16.8 billion.
However, this figure was just 1.9% of Bitcoin’s average market cap of $892 billion. Although revenue decreased last year, the difference in percentage between 2021 and 2022 was minimal.
According to Glassnode’s chart from 2011 to 2022, as the market cap of BTC decreased, mining revenue also steadily reduced in a similar proportion.
Furthermore, miner fees were about $141 million last year. This amount is only 0.026% of Bitcoin’s market capitalization, which has fluctuated over the previous twelve years.
However, the chart reveals that the percentage has remained below 12%. Also, mining fees and revenue represented only 0.0010% and 0.064% of Bitcoin’s $14.86 trillion worth of transactions last year.
Still, Bitcoin’s monetary velocity was 7.7 last year compared to 2021’s 5.2. Bitcoin’s monetary velocity is the speed of Bitcoin’s circulation.
The Adoption Of Technologies Like The Lightning Network
In the last twelve years, BTC’s transaction volume and market capitalization have grown faster than mining income and fees. Meanwhile, several critics and naysayers opine that BTC will continue consuming excessive energy in the foreseeable future.
Also, detractors say that the blockchain will not need little energy to maintain its level of safety if transaction fees gradually replace Bitcoin’s block subsidy. However, Alden argued that these doubters do not consider the adoption of SegWit.
“Since the implementation of the Segwit soft fork, an increase in Bitcoin fees has often led to a surge in Segwit adoption. This results in an overall increase in efficiency of the network over time,” Alden added.
According to Alden, if transaction volume for BTC continues to increase, it will lead to an increase in fees. This increment will encourage the development and adoption of technologies such as the Lightning Network to address this issue across the blockchain.
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