According to Cambridge University’s Centre for Alternative Finance, Bitcoin mining’s greenhouse gas emissions have declined by 14.1% from 2021.
The profitability of the Bitcoin mining industry has captured the attention of miners of the widely adopted Crypto community. However, according to data, the sustainable electricity mix of Bitcoin mining has completely changed over the past few years, with nuclear energy and natural gas turning out to be the fastest growing energy sources that power Bitcoin mining.
Bitcoin Mining Emits 0.1% of Greenhouse Gas
Today, the Cambridge Centre for Alternative Finance (CCAF), which is a part of the Cambridge Judge Business School, released essential data on the environmental effect of Bitcoin mining by running its theoretical model Cambridge Bitcoin Electricity Consumption Index (CBECI) to compute electricity mix and calculate Bitcoin mining’s greenhouse gas CO2 emission intensity per kilowatt-hour (gCO2e/kWh).
According to the report, the emission intensity of Bitcoin mining was 506.71 gCO2e/kWh in 2021, whereas it was 491.24 in 2020. However, the report did not release this year’s emission intensity as nothing can be concluded until January 2023. The report further mentioned that fossil fuels like natural gas and coal acquire nearly two-thirds of Bitcoin’s electricity mix as of January 2022, which is over 62%. The amount of sustainable energy sources amounts to almost 38% in Bitcoin mining. Coal takes up a large amount of electricity consumption for Bitcoin, which is nearly 37%. The report further suggests that Hydropower has a great sustainable energy source with a contribution of nearly 15%.
The report said, “48.35 MtCO2e represents approximately 0.10% of global greenhouse gas emissions and is similar to that of countries such as Nepal (48.37 MtCO2e) and the Central African Republic (46.58 MtCO2e), or about half that of gold mining (100.4 MtCO2e).” However, the head authority of CBECI, Alexander Neumueller, claimed that the report was unable to track the emission data produced by the use of flare gas, energy produced behind the meter, and waste heat recovery.
A White House report on cryptocurrency assets and climate published this month encouraged and motivated regulators to work together towards reducing greenhouse gas emissions and stated that the administration or Congress might consider putting restrictions on crypto if all else fails. On the other hand, the report suggested that certain types of eco-friendly energy can be used to run Bitcoin mining which may have a positive impact on the environment. Marathon CEO Fred Thiel replied to the White House report saying that U.S. regulators should make a structure of providing incentives for Bitcoin miners who use renewable energy and disincentives for fossil fuel-based sources.
Reason For Sudden Decrease In GHG Emission
The report suggests that a significant decrease in Bitcoin mining profitability results in a decline in Greenhouse gas emissions despite hashrate staying constant. Elaborating on this, Neumueller said, “Even if the hashrate is increasing, this does not necessarily translate into increased demand of electricity consumption if the efficiency of the devices is increasing. Miners are rational economic agents. They would not run something just for running. They would turn off machines that are not profitable and then continue with the more profitable ones.”
The report also addressed the arguments of both Bitcoin mining’s negative and positive impact on the environment for climate change. The report states, “Observing the arguments of both sides, some claims seem rather far-fetched and based on over-simplifications, while others are based on scant information.Interest groups on both sides are vying for interpretive authority to sway public opinion in their favour (sic) and persuade policymakers as to the necessity of regulations.”
Chinese authorities previously shut down a large number of crypto mining farms powered by hydroelectricity in 2021, and the Chinese government’s ban on crypto mining has forced miners to shift to other countries to continue their mining journey, resulting in a negative impact on the environment. The contribution of gas in the BTC electricity mix spiked from nearly 13% in 2020 to 23% in 2021, while nuclear energy’s share increased from 4% in 2021 to nearly 9% in 2022. CCAF’s report on the data on sustainable energy uses references of the 59.5% use of sustainable energy that the Bitcoin Mining Council came up with in the second quarter of 2022 after reviewing several mining companies.
