Proportion of renewable sources powering Bitcoin mining industry plummets after miners shift from China to Kazakhstan and the United States
Bitcoin mining has decreased its use of renewable energy sources since China cracked down on the industry, new research has found.
The share of renewable energy sources, such as hydro, solar or wind power, fuelling mining fell from 41.6 percent in 2020 to 25.1 percent as of August 2021, according to a peer-reviewed study published in the journal Joule.
The dramatic shift follows the industry’s near-complete exodus from China, where miners had flocked to areas with inexpensive hydro electricity during the wet summer months.
China increased its enforcement of mining bans in key provices last year, with the result that the industry was more or less eliminated from the country by June 2021.
Many miners, who use powerful computers to generate new Bitcoins in a process that was intentionally designed to consumer large amounts of power, moved to nearby Kazakhstan or to the United States.
Miners typically seek out areas with inexpensive electrical power.
In the US, popular mining areas such as Texas, Kentucky and Georgia use less renewables than the national average, according to Alex de Vries, one of the authors of the study.
Kentucky “grants tax breaks to attract Bitcoin miners and thus saves coal companies”, the study noted.
Other US-based mining operations largely rely on power generated from natural gas.
Kazakhstan, meanwhile, uses coal-fired power stations burning “hard coal” that is more polluting than Chinese coal, the researchers said.
They estimated the shifts increased the carbon intensity of Bitcoin by about 17 percent.
The cryptocurrency produces about 65.4 megatonnes of carbon dioxide per year, comparable to Greece, which produced 56.6 megatonnes of the gas in 2019.
De Vries said the carbon footprint of a single Bitcoin transaction was comparable to the per-passenger emissions of a flight from Amsterdam to New York, estimated at about 670kg per passenger by the calculator from the UN’s civil aviation body, the International Civil Aviation Organization.
“A rapid solution to Bitcoin’s carbon footprint is not within sight,” wrote the study’s authors, who hail from Vrije Universiteit Amsterdam, Technical University of Munich, ETH Zurich and the Massachusetts Institute of Technology.
Industry groups had presented more optimistic estimates of Bitcoin’s green credentials, with the Bitcoin Mining Council saying the industry’s proportion of sustainable electricity had grown to about 58.5 percent, while Coinshares, a digital-asset investment firm, has estimated a share of up to 73 percent.
Estimates vary in part due to the difficulty of determining exactly where Bitcoin miners are based.
Electric carmaker Tesla last year briefly said it would allow purchases in Bitcoin, but cancelled the plan after criticism over the cryptocurrency’s environmental impact.