Bitcoin has been regularly attacked for its energy-intensive mining process, powered by serious amounts of electricity. It’s been claimed that it leaves a carbon foot print comparable to that of a large city or even a small country, an allegation that often finds its way to the headlines of mainstream media outlets. But a new study proves the devil is in the details. Bitcoin’s CO2 emissions, according to the authors, are much more modest than suggested by previous reports.
Getting the Numbers Right
Various studies have painted a pretty negative picture of Bitcoin’s energy consumption so far. “Participation in the Bitcoin blockchain validation process requires specialized hardware and vast amounts of electricity, which translates into a significant carbon footprint,” wrote a team of researchers from the Technical University of Munich and MIT. According to their articlepublished earlier this year, the annual electricity consumption of Bitcoin, as of November 2018, was 45.8 TWh, and the carbon emissions reached almost 23 megatons of CO2, a figure comparable to what Jordan or Kansas City emit each year.
Other researchers have made even bolder, eyebrow-raising claims. A University of Hawaii at Mānoa study released last year suggested that Bitcoin emissions alone could push global warming above 2°C a little over a decade from now, jeopardizing the planet’s climate change reduction goals. “Bitcoin usage emitted 69 MtCO2e” in 2017, the authors concluded based on compiled data on the electricity consumption of the computing systems used for Bitcoin verification at the time and the emissions from electricity production in the countries where mining companies are predominantly based.
However, Susanne Köhler and Massimo Pizzol from Denmark’s Aalborg University believe something’s not entirely right with such estimates. In their publication entitled “Life Cycle Assessment of Bitcoin Mining,” they point out that other studies rely on general assumptions about the CO2 emissions from electricity generation and presumptions that these are uniform across a given country, say China. In contrast, their approach to analyzing the matter takes into account the geographical distribution of mining facilities within the People’s Republic, which hosts a little more than half of all bitcoin miners today, to produce a much lower figure. “It was found that, in 2018, the Bitcoin network consumed 31.29 TWh with a carbon footprint of 17.29 MtCO2-eq,” the abstract of the study notes.
Köhler and Pizzol have emphasized that the Chinese region of Inner Mongolia, which relies heavily on fossil fuels like coal to generate its electricity, is home to only around 12% of the bitcoin miners, while Sichuan, a province where renewable sources such as hydropower generating capacities are widely spread, hosts over 30% of the mining facilities operating in the country. Therefore, Sichuan’s contribution to bitcoin mining’s CO2 emissions is considerably smaller. That has to be taken into account when gauging Bitcoin’s overall carbon footprint in China, given that Sichuan is the largest mining region in the People’s Republic.
Bitcoin’s Impact Expected to Shrink
The authors of the Danish paper have also concluded that the bulk of the environmental impact of Bitcoin was a direct result of the use of electricity and of mining equipment in the minting process. The hardware’s production and recycling had a very limited impact, accounting for only around 1% of the carbon emissions during the studied period. “In contrast to previous studies, it was found that the service life, production, and end-of-life of such equipment had only a minor contribution to the total impact, and that while the overall hashrate is expected to increase, the energy consumption and environmental footprint per TH mined is expected to decrease,” the article stresses.
The two researchers do admit that “The lack of a robust methodological framework and of accurate data on key factors determining Bitcoin’s impact have so far been the main obstacles in such an assessment.” Quoted by New Scientist, Susanne Köhler also remarks that the findings in the study don’t mean people shouldn’t worry about Bitcoin’s carbon footprint, given the growing amount of electricity used for the minting of each new coin. Nevertheless, she insists that things have to be put it in perspective:
On the one hand, we have these alarmist voices saying we won’t hit the Paris agreement because of bitcoin only. But on the other, there are a lot of voices from the bitcoin community saying that most of the mining is done with green energy and that it’s not a high impact.
Besides purely environmental concerns, socio-economic effects have to be taken into account as well. As a sort of a regulatory recognition, the Chinese government recently removed bitcoin mining from a list of unwanted industries. As a result, the minting of digital coins has become less illegal than it used to be, as a Chinese bitcoin miner speaking to news.Bitcoin.com recently put it. The sector has attracted a lot of investment and created many jobs in China. And this year’s crypto market rebound has brought mining back to profitability. The really good news is that you don’t even need to acquire mining equipment in order to participate and profit from the creation of new permissionless money.