In this paper, conversion of paper sludge to ethanol was investigated with the objective of optimization of the overall operation costs. Experimental work was undertaken to optimize cellulase loading, and to determine mixing energy requirements. It was found that decreasing feeding frequency (feed additions per residence time) allows the cellulase loading to be decreased at least two fold with no decrease in cellulose conversion but also entails mixing a slurry of higher solids content and lower conversion at the beginning of the operating cycle. The viscosity of paper sludge slurries was found to increase exponentially with decreasing conversion and increasing solid content. In particular, the viscosity (V) was described well by equation V = e(kX−X 0 )(S−S 0 )+C (V viscosity (cp), X conversion, S solid content (g/L), k, X 0, S 0, C are empirical parameters). Added costs associated with operating at low feeding frequencies (including higher mixing energy and higher capital costs for the motor and for sludge hold tasks) were found to be small compared to the economic benefits resulting from reduced cellulase loading.