Bitcoin (BTC)

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Field

Content

General information

S.1

CASP Name

BB TRADE ESTONIA OÜ

S.2

Relevant legal entity identifier

984500L05A5D0E66Q610

S.3

Blockchain network name

Bitcoin

S.4

Name of the crypto-asset

Bitcoin/BTC

S.5

Consensus Mechanism

Proof of Work (PoW)

S.6

Incentive Mechanisms and Applicable Fees

Bitcoin’s incentive structure leverages game theory to ensure that individual miners act in the network’s best interest. As the block subsidy diminishes, transaction fees are expected to become the primary incentive, fostering a sustainable and secure Bitcoin ecosystem. Miners earn rewards for successfully mining a block, which includes:

● Block Subsidy: A fixed amount of new bitcoins introduced into the system, designed to kickstart the network. Transaction Fees: Variable fees set by users for including their transactions in a block. Users can choose the fee amount, and miners typically prioritize higher fees due to the scarcity of block space, creating a market where fees are determined by supply and demand. 

● The proof-of-work mechanism requires significant computational effort, discouraging malicious activities. Attempting to validate fraudulent transactions would result in wasted resources and lost rewards once the blocks are rejected by the network, whereas honest behaviour is rewarded with the block reward, aligning miners’ interests with maintaining the network’s integrity. The block subsidy decreases over time through halvings, reducing the creation of new bitcoins and controlling inflation. This transition aims to make transaction fees sufficient to sustain mining activity as the network matures, ensuring long-term security and preventing a negative feedback loop between network security and usage.

Full nodes do not receive direct financial incentives to verify transactions. They run full nodes for ideological reasons, such as supporting a secure and decentralized currency, and practical purposes, ensuring their own transactions are accurately processed and recorded.

S.7

Beginning of the period to which the disclosure relates

2024-01-01

S.8

End of the period to which the disclosure relates

2024-12-31

Mandatory key indicator on energy consumption

S.9

Energy consumption

~85,000,000,000 kWh per calendar year

S.10

Energy consumption sources and methodologies

Bitcoin's energy consumption originates from the electricity used by specialized mining hardware (ASIC miners) and their supporting infrastructure (e.g., cooling systems, data centers). These machines continuously perform cryptographic computations to secure the network. Methodologies for estimating this consumption often involve:

Efficiency-based modeling: Analyzing the energy efficiency (Joules per Terahash) of various generations of ASIC miners and applying this to the total global hash rate. 

Power consumption of typical hardware: Estimating the power draw of common mining rigs and scaling up based on the number of active miners/hash rate.

Prominent research initiatives such as the Cambridge Bitcoin Electricity Consumption Index (CBECI) and Digiconomist's Bitcoin Energy Consumption Index are key sources for these estimates, employing sophisticated models to account for global mining activity and hardware characteristics.

Supplementary key indicators on energy and GHG emissions

S.11

Renewable energy consumption

~58%

S.12

Energy intensity 

~405.68 kWh per transaction

S.13

Scope 1 DLT GHG emissions – Controlled

0 t CO2eq per calendar year

S.14

Scope 2 DLT GHG emissions – Purchased

~42,000,000 t CO2eq per calendar year

S.15

GHG intensity 

~127.26 kg CO2eq per transaction

S.16

Key energy sources and methodologies

Bitcoin mining operations utilize a diverse global energy mix. Key sources include fossil fuels (primarily natural gas and coal) and a significant and growing portion of sustainable energy (hydroelectric, solar, wind, geothermal, and nuclear). Miners often seek out stranded energy or locations with abundant renewable resources. Methodologies for assessing energy sources and their mix involve:

Geographical mapping: Identifying the regional distribution of mining operations and correlating it with local/national electricity grid mixes.

Miner surveys: Direct data collection from mining participants (e.g., Bitcoin Mining Council reports).

Energy data integration: Using datasets on global electricity generation, carbon intensity factors, and renewable energy penetration from authoritative bodies (e.g., IEA, EIA, Our World in Data, Ember).

S.17

Key GHG sources and methodologies

The primary source of Greenhouse Gas (GHG) emissions for Bitcoin is Scope 2 (indirect emissions from the generation of purchased electricity). Methodologies for estimating these emissions typically involve:

Energy consumption multiplied by emission factors: Taking the estimated total electricity consumption and multiplying it by the carbon intensity (grams of CO2 equivalent per kWh) of the electricity grid mix powering the mining operations. This often considers the geographical distribution of miners.

Lifecycle assessments (LCA): Some more comprehensive analyses may include a limited scope of Scope 3 emissions (e.g., hardware manufacturing, transport), but the dominant focus remains on Scope 2.

Reputable organizations such as Digiconomist, the Cambridge Centre for Alternative Finance (CBECI), and academic research often provide these analyses, continuously refining their models based on new data and insights into the global mining landscape.