А well-known cryptocurrency market analyst Vladimir Okhotnikov and founder of the Floralia company acted as an expert in connection with the publication of the article University Distorts Information On The Energy Use For Bitcoin Mining? The article is devoted to a study by the United Nations University on the energy costs of Bitcoin mining. According to Vladimir Okhotnikov the report contains a number of significant errors and inaccuracies.
To create the report, the UN University used a simplified approach based only on indirect estimates through the income of miners. This methodology inevitably leads to a distortion of the real picture of energy costs due to the decentralized nature of Bitcoin. The study did not take into account significant geopolitical changes in recent years, such as the ban on mining in China and the introduction of taxes in Kazakhstan. All this radically affected the balance of power in the industry.
According to Vladimir Okhotnikov, the key factors determining mining energy consumption are the price of Bitcoin, network complexity and equipment efficiency. However, these parameters were not adequately taken into account in the UN study.
Vladimir Okhotnikov criticized the UN University methodology of assessing the Bitcoin mining energy costs
The expert believes that one of the key problems of the UN study was the use of outdated information from the Cambridge Bitcoin Energy Consumption Index (CBECI). This indicator is one of the main sources of data on energy costs for the production of the first cryptocurrency.
“UNU used CBECI information in its analysis, which does not take into account recent updates to the index’s models. This led to the fact that the obtained energy consumption estimates differ significantly from the real picture,” noted Vladimir Okhotnikov.
The UN University’s neglect of the latest updates to CBECI calculation models was one of the key reasons for the distortion of the real picture of Bitcoin mining energy costs. This significantly undermines the reliability and objectivity of the conclusions drawn in the study.
Experts agree that in order to obtain correct estimates, it is necessary to use current data that takes into account all recent changes in the methods for calculating the leading indicators of energy consumption in the cryptocurrency industry.
One of the key shortcomings of the UN study is the combination of cryptocurrency mining energy consumption indicators for 2020 and 2021 into a single summary indicator.
According to Vladimir Okhotnikov, this approach distorts the real dynamics of energy consumption, “The problem of combining energy consumption indicators for cryptocurrency mining for 2020 and 2021 into one common indicator significantly complicates the interpretation of the results. After all, the total value of 173 TWh refers to two years at once, and not one 12 -monthly period“.
The expert notes that without correctly taking into account the trend towards improving the characteristics of miners, the research results will inevitably be distorted towards higher energy consumption indicators. This methodological flaw also casts doubt on the reliability of the UN University’s findings.
In conclusion, the need for a deeper and more comprehensive analysis of the data is emphasized, as well as the importance of dividing statistics by year to reliably assess the dynamics of Bitcoin mining energy consumption.