A new study shows that mining the largest cryptocurrency has become dirtier despite a crackdown in China last year. It emits approximately the same amount CO2 each year as a country of the size of Greece.
Revisiting Bitcoin’s carbon footprint was a joint study that found that the amount of renewable electricity used to fuel Bitcoin may have dropped from an average 41.6 per cent in 2020 down to 25.1 per cent by August 2021.
It also revealed that Bitcoin could contribute to 65.4 megatonnes per year of CO2, which is comparable to the country-level CO2 emissions in Greece.
Chinese authorities in May 2021 ordered a crackdown against crypto mining and trading. Financial institutions were also prohibited from offering services related thereto by regulators.
Many miners fled to Kazakhstan or the United States as a result.
Alex de Vries, one of two authors of the study and a researcher at Vrije Universiteit Amsterdam’s School of Business and Economics, said that one of reasons for the decline of renewable energy sources to power Bitcoin mining is that the Bitcoin network has lost access to hydropower from Chinese provinces of Sichuan and Yunnan.
“The reason why they had that amount of renewables was because within China, they could move around and they could get hydropower during the summer months and then in the winter months, they would be using coal,” he told Euronews Next.
He stated that as soon as China ban Bitcoin mining, they moved on to Kazakhstan and the US.
“Kazakhstan coal replaced the Chinese coal, and Kazakhstan uses hardcore, which is the worst type of coal, the most carbon-intensive type of coal,” de Vries said, adding that in the US, miners replaced hydropower with natural gas.
Bitcoin uses a system known as “proof of work”. The mechanism is used by Bitcoin to confirm transactions and add blocks to its chain.
The system works as a competitive numeric guessing game and requires a global network to run simultaneously when a transaction occurs. Because it encourages increased computing effort, it consumes a lot of energy.
Bitcoin was designed to resist regulation and censorship. However, de Vries says that even if every country bans Proof of Work mining, it won’t make any difference.
“As a country, you can’t really hide mining on the grid but as soon as that type of operation is completely forbidden then the next issue is that people can still buy these machines and put them in their own houses,” he said.
Finding a solution can be difficult, however, because even switching to renewable energy, which is more expensive than fossil fuels has its problems.
“You would have to bring down the price of renewables by law to make sure that these mines only use renewables, and then the question is, do you want them using your renewables because you’d have to subsidise it for them? But what are you getting back for?” de Vries said.
Companies and world leaders have attempted to regulate the environmental impact of cryptocurrencies.
Last year, more than 200 companies and individuals signed the Crypto Climate Accord. They pledged to net-zero operations by 2025. This would include primarily switching to renewable power sources.
De Vries stated that the accord is not a solution, as it is voluntary, based on the latest report.
“It clearly is not working because the network actually got less green during the year.
“They need some kind of enforcement mechanism in there, they need to have some kind of enforcement mechanism, then there may be some kind of reward, maybe some kind of punishment, but at least something to make it more credible”.
