According to recent study, China’s Bitcoin prohibition has shifted the process of creating new currencies, known as mining, to regions where renewable energy is scarce.
Last year, China’s crackdown on cryptocurrencies threw the Bitcoin world into disarray, prompting a large flight of “miners” — people who use power-hungry computers to mine, or create, new Bitcoins — to new sites all over the world. Cryptomining, which already consumes more electricity than many countries, has now been determined to be significantly worse for the environment as a result of the exodus, according to new research. According to the peer-reviewed analysis, the Bitcoin network’s utilisation of renewable energy sources such as wind, solar, and hydropower plummeted from 42 % in 2020 to 25 % in 2021.
One possible explanation is that bitcoin miners lost access to hydropower from Chinese locations where they had been able to power their computers with inexpensive, abundant, renewable energy during the rainy summer months. Instead, a large number of miners fled to Kazakhstan, as well as further afield, to the United States. Miners in those countries have increased their use of fossil fuels, primarily coal in Kazakhstan and natural gas in the United States. Coal and natural gas are both climate change drivers because they release massive amounts of planet-warming carbon dioxide into the atmosphere when they are burned.
Bitcoin mining, according to the experts from Vrije Universiteit Amsterdam, Technical University of Munich, ETH Zurich, and the Massachusetts Institute of Technology, is responsible for around 65 megatons of carbon dioxide per year, which is similar to Greece’s emissions. “It’s bad news for Bitcoin owners since their assets just got dirtier,” Alex de Vries, one of the paper’s co-authors, said. Mr. de Vries stated, “There was a lot of optimism that China restricting Bitcoin mining would make mining more green.” “However, the fact is that it was already a filthy business, and it just got dirtier.”
The %age of renewable energy sources used by Bitcoin miners has been frequently estimated in the past. The global average of renewables used in mining, according to the Cambridge Centre for Alternative Finance, is roughly 40%. According to the Bitcoin Mining Council, which represents the sector, the figure is closer to 60%. Bitcoin miners use up to 73 % of the electricity generated by renewables, according to Coinshares, a digital asset investing firm.
One of the major reasons for the disparities is that pinpointing the exact locations of all of the world’s Bitcoin miners, by far the largest cryptocurrency, is challenging. Cambridge researchers have been compiling statistics on the global distribution of miners for several years.
