After China Ban, Crypto Mining Gets Worse Because of Climate

Of China Cryptocurrency suppression Last year, the Bitcoin world turned upside down, causing a massive exodus of “miners” – people who use power-hungry computers to mine or create new Bitcoins – to new locations around the world. .

Now, research has found that the exodus has the potential to generate cryptocurrency, which already uses more electricity than much water, which is even worse for the climate. According to peer-reviewed research, appearing in the journal Joule, the Bitcoin network’s use of renewable energy sources such as wind, solar, or hydro has dropped from an average of 42 percent in 2020 to 25 percent. % in August 2021.

One possible reason: Bitcoin miners who have lost access to hydroelectricity from areas inside China have provided cheap, abundant, cheap renewable energy to their computers for a long time. wet summer months. Instead, a significant number of miners have migrated to nearby Kazakhstan, as well as further afield to the United States.

In those countries, miners have been using more fossil fuels, mainly coal in Kazakhstan and natural gas in the US. Coal and natural gas are both contributors to climate change because burning fossil fuels pumps large amounts of planet-warming carbon dioxide into the atmosphere.

Researchers from Vrije Universiteit Amsterdam, Technical University of Munich, ETH Zurich and Massachusetts Institute of Technology, estimate that Bitcoin mining can generate around 65 megatons of carbon dioxide per year, which is equivalent to the emissions of Greek. “It’s bad news for Bitcoin holders as their holdings are getting dirtier and dirtier,” said Alex de Vries, co-author of the paper.

“There are many optimists that China banning Bitcoin mining will make mining greener,” Mr. de Vries said. “But the reality is, it’s already a dirty business and it’s only getting worse.”

The latest research adds to the debate about the environmental impact of Bitcoin mining at a time when the cryptocurrency’s position in mainstream finance has grown. In particular, Bitcoin mining has come under scrutiny because it is designed to become more difficult as more miners join, making mining each Bitcoin more energy-intensive. (Ethereum, another cryptocurrency, is working on an alternative method that will use less energy.)

There have been various estimates in the past about the proportion of renewable energy sources used by Bitcoin miners. ONE survey of the Cambridge Center for Alternative Finance puts the global average of renewables used in mining at around 40%. The Bitcoin Mining Council, an industry group, put the number closer to 60%. And Coinshares, the digital asset investment company, has estimate that 73% of the electricity used by Bitcoin miners is provided by renewable energy.

A big reason for that discrepancy is that it is difficult to pinpoint the exact locations of all the Bitcoin miners in the world, by far the largest cryptocurrency. For several years now, Cambridge researchers have been adhering to data on the global distribution of miners, based on information gathered from four “mining pools,” or pools of miners combining different resources. their calculations. But that number only covers about 44% of total Bitcoin mining activity as of October 2021.

The new study used location data from Cambridge, combining it with data on carbon usage in electricity generation in that country.

For the US, the study uses data from Foundry USA, a mining group that allows further analysis of the locations of miners, which is important because how electricity is generated and how much renewable energy is part of it. of the energy mix, nationwide change. But for other countries, that problem is not available.

Chris Bendiksen, Bitcoin research lead at Coinshares, says that his company has mined location data gathered from financial disclosures, as well as proprietary industry data, to provide an estimate of usage. renewable use. It also accounts for the fact that an increasing number of miners in the United States are contracting with natural gas drillers to use up excess gas that would otherwise be “flare-up” – intentionally burned to waste – or simply released into the atmosphere. unburnt and unused.

Ultimately, the Bitcoin industry’s goals remain aligned with climate goals, he said. “I think we all agree that we need to move away from fossil fuels. We need to focus on building and decarbonizing the grid,” he said.

Bitcoin could even support that goal, he said, by creating demand for any excess energy generated by renewables, but would shut down immediately during times of scarcity. supply. (In most of the world, however, excess renewable energy is rare.)

Benjamin A. Jones, an assistant professor of economics at the University of New Mexico who has research related to the environmental impacts of cryptocurrency mining, said the latest findings appear to be in line with the existing findings. what he expected, given the exodus of cryptocurrency miners from China, where they have access. to renewable hydroelectricity.

“It is not a shock to me that China banned mining there, miners have left and gone to other countries and these other countries tend to have less spare renewable capacity for mining camps,” he said. “If true, then their implication is that Bitcoin mining is going in the wrong direction.” After China Ban, Crypto Mining Gets Worse Because of Climate

Fry Electronics Team

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