Bloomberg analyst Jamie Coutts revealed data showing that carbon dioxide equivalent emissions from Bitcoin mining activities peaked at 60.9 megatons in mid-2021, but have since decreased by 37.5%. According to Daniel Batten, one of the founders of CH4 Capital, the bans imposed in China have led Bitcoin miners to shift towards renewable energy sources.
Exaggerated Data on Bitcoin
Claims that Bitcoin mining consumes excessive energy, particularly since 2021, are based on the energy used by the computers used to estimate the correct hashrate. The Cambridge Alternative Finance Center revised its estimate from 100 TWh to 95.5 TWh using new data from the Coin Metrics data analysis platform. However, according to Coutts, Cambridge did not incorporate the new off-grid power sources and the transition of miners to off-grid sources in its estimate. Batten’s study, which includes these data, revealed that despite a 400% increase in Bitcoin hashrate since 2019, the carbon emission rate from Bitcoin mining activities has only increased by 6.9%. Furthermore, since China banned Bitcoin mining nationwide in 2021, carbon dioxide equivalent emissions in this field have decreased by 37.5%. Coutts explained this situation with the following statement:
“These data show that concerns about Bitcoin’s carbon footprint are exaggerated.”
The goal of mining activities is to accurately predict the digital transaction contract (hash) of transactions that occur in a Bitcoin block. Miners use special computers called ASICs to make these predictions and earn the BTC reward mined from the block. Miners who accurately predict the hashrate receive a block reward of 6.25 BTC, equivalent to approximately $165,535, until the halving event occurs.
Promoting Renewable Energy
In years of ongoing debates, Bitcoin owners have argued that Bitcoin is unfairly targeted in this field. However, the energy consumption of Bitcoin miners can vary depending on the region they operate in. Applied Digital, a Bitcoin mining company, recently revealed in an analysis that it uses nearly 90% fossil fuel in its Bitcoin operations. A subsequent study found that Applied Digital is the highest consumer of fossil fuel, accounting for approximately 54% of all power it generates. While climate experts typically point to the first factor, industry players prefer the second as it reveals the power mix they use. As a result, miners who do not have a window into how grids manage their resources provide information on how much energy they consume from a specific source compared to other consumers.
Experts conducting research on this topic highlight that Bitcoin mining companies generally rely on fossil fuels, while significant companies operating in this field prefer both renewable energy and fossil fuel consumption. As a result, many companies do not have clear information about the source of the energy they use. Regarding this issue, Lee Bratcher, a member of the Texas Blockchain Council, argued that companies should be encouraged to develop and promote renewable energy facilities.
