The cost of Bitcoin mining has never really increased
This addresses the problem of understanding Bitcoin's energy efficiency and security trade-offs for cryptocurrency researchers and policymakers, but it is incremental as it builds on existing economic models.
The paper estimates the global energy cost of Bitcoin mining over ten years, finding that despite massive increases in hashing activity and energy consumption, the cost relative to transaction volume has remained stable since 2010, consistent with the need for proof-of-work to secure the network.
The Bitcoin network is burning a large amount of energy for mining. In this paper we estimate the lower bound for the global energy cost for a period of ten years from 2010, taking into account changing oil costs, improvements in hashing technologies and hashing activity. Despite a ten-billion-fold increase in hashing activity and a ten-million-fold increase in total energy consumption, we find the cost relative to the volume of transactions has not increased nor decreased since 2010. This is consistent with the perspective that, in order to keep a the Blockchain system secure from double spending attacks, the proof or work must cost a sizable fraction of the value that can be transferred through the network. We estimate that in the Bitcoin network this fraction is of the order of 1%.