# Banking on Blockchain: Costs Savings Thanks to the Blockchain Technology
## 4 The Bitcoin System
### Efficiency
#### 4.2.1 Economic Efficiency  
We defined the \"economic efficiency\" (EE), as the ratio between the value of bitcoins expressed in US$ mined by the power consumption of 1 kWh.  
In order to compute this quantity, data about the number of bitcoins generated over time and the bitcoin price were recovered from the \"blockchain.info\" web site. Data about the power consumption are computed by using the fitting curve defined in Equation (2), and data about the real hash rate are recovered from the \"blockchain.info\" web site.  
Figure 5 shows the trend of economic efficiency over time. We can observe that EE reached the highest values in the period between April and August 2013. In particular, the economic efficiency reached its highest value, exactly equal to US$63.47 per kWh, on 9 April 2013.  
\begin{table}
\begin{tabular}{c c c c} \hline \hline
**Date** & **Simulation Step** & **Average of Hash Rate** \
\begin{tabular}{} \end{tabular} & **Average of Power Consumption**
\begin{tabular}{} \end{tabular} \\ \hline
1 September 2010 & 1 & 0.0017 & 454.87 \\
29 September 2011 & 394 & 0.0014 & 19.8 \\
2 December 2011 & 458 & 0.00175 & 34.4 \\
28 December 2011 & 484 & 0.0017 & 72.575 \\
1 May 2012 & 608 & 0.0029 & 72.575 \\
17 December 2012 & 835 & 0.03565 & 1 \\
10 April 2013 & 953 & 0.0194 & 6 \\
31 May 2013 & 1004 & 0.0201 & 6 \\
15 October 2013 & 1141 & 0.1351 & 3.84 \\
10 December 2013 & 1197 & 0.0595 & 3.84 \\
22 January 2014 & 1240 & 0.245 & 2 \\
4 July 2014 & 1403 & 0.583 & 1.1 \\
23 October 2014 & 1513 & 1.6 & 0.69 \\
30 August 2015 & 1824 & 2.756 & 0.51 \\
1 December 2015 & 1918 & 2.666 & 0.249 \\
1 May 2016 & 2070 & 4.746 & 0.273 \\
30 September 2016 & 2221 & 8.465 & 0.099 \\ \hline \hline \end{tabular}
\end{table}
Table 1: Average of Hash Rate and of Power Consumption over time.  
Figure 5: Economic efficiency expressed in US$ per kWh from 1 September 2010 to 31 December 2016.  
The trend of EE is strictly linked to the rapidly growing interest in the Bitcoin system that steadily drove the prices higher and higher. Bitcoin price, starting from negligible values, reached values of about $140 in April 2013 and about $1000 in November 2013. This price increase caused the growing trend of EE until 10 April 2013 and also its fall from 10 April onwards. In fact, such a huge interest brought an arms race for acquiring efficient and specialized mining hardware. From 10 April 2013 onwards, EE started to decrease due to the dramatic increase of the total hash rate and power consumption also, in conjunction with the halving of the bitcoin mining prize, which halved two times in this period. Specifically, Bitcoin's block reward was halved the first time, from 50 to 25 bitcoins in November of 2012, and the second time, from 25 to 12.5 bitcoins on 9 July 2016. Figure 6 shows the trend of the EE, expanding the \(x\)-axis to highlight its values from 1 October 2015 to 30 September 2016. During this period, the EE ranges between 0.3 and US$0.85 per kWh. In this figure, it is also possible to observe the effect of the last halving on the trend of EE, which falls sharply on that day.  
Note that the EE is also strictly linked to the energy cost, and indeed the majority of hashing power of Bitcoin network is concentrated among a handful of Chinese mining pools [41], given that China is one of the countries where there are the lowest energy costs. Thus, if we take into account the variable component of the energy cost for Chinese industrial consumers, which ranges between 0.0525 and 0.0825 US$/kWh (0.35 a 0.55 Y/kWh). Note that, in China, the variable component of the energy cost has to be added to the fixed component, which depends on the stipulated contract. and compute the profit per kWh, we obtain a value that ranges between $0.2475 and $0.7675. Compared to China, in Italy (which is the European country with the highest electricity price), the average energy cost for non-domestic users is equal to 0.2119 US$/kWh [42], and, as a result, the profit per kWh is much lower, exactly between $0.0881 and $0.6381.