Bitcoin is considered by laymen to be an absolute climate killer. Thousands of special computers around the world have to solve calculations every second to keep the decentralized system alive. This process, known as mining, is based on a so-called proof-of-work algorithm, and now consumes as much electricity as small nations like Finland or Switzerland. Therefore, the EU wanted to legally ban BTC mining in 2022, BTC-ECHO exclusively reported. China took the plunge last year, prompting a mass exodus of BTC miners from the People’s Republic. To what extent is the image of the climatic sinner justified?
The European Heritage Manager coin stocks draws attention to another much more important factor in a January 2022 study: actual CO₂ emissions. They say much more about the actual environmental impact than pure energy consumption. And according to the report, Bitcoin fares much better than many other long-established industries. The global banking system, the gold industry, data centers, air traffic and shipping: Compared to Bitcoin, they are the significantly largest emitters of CO₂.
According to Coinshares, it has compiled comprehensive data sets from various sources into a single model, the most comprehensive report to date. Their result: 42 million tons of CO₂ emissions per year, many times less than comparable industries. There are also other numbers: a study of foreign exchange estimates CO₂ emissions at 57 and Digiconomist it even reaches 65 million tons. That is still much less than banks, gold and company.
The problem with the numbers.
The results of these calculations depend on the data sets available for mining. Where is it extracted, how much and from what energy sources? And there, also in the Coinshares report, there are still large gaps that are closed according to estimates. Hence the wide range. It is also important to consider what factors are included in the calculation. While Coinshares estimates an energy consumption of 89 terawatt hours with its model, a Cambridge study speaks of 299 terawatt hours. In addition, it must be said: The investment company itself makes money from the sale of ETP (Exchange Traded Products) in exchange for Bitcoin, so it is not independent in this matter.
At the heart of the debate about how bad BTC mining really is for the climate remains the question: From what sources does the energy for the network come? Miners often settle in certain regions and build large hardware farms there. These can be classified very differently in terms of their CO₂ balance.
Kazakhstan, the US states of Montana and Kentucky, and the Canadian province of Alberta, for example, provide 26 percent of all power for the grid but are responsible for 43 percent of carbon emissions, according to the report. These miners mainly focus on coal, gas and oil. Other regions, such as Sweden and the Canadian provinces of Quebec, Manitoba, and more recently Texas, generate only low emissions with comparatively high benefits to the grid. Unfortunately, according to Digiconomist, the trend is negative: they estimate that the share of renewable energy in BTC mining has fallen in the last year, from a total of 43 to 25 percent. The reason for this is the mining ban in China, where there was a particularly large amount of environmentally friendly mining.
More than 200 companies and individuals from the industry came together for the Crypto Climate Accord last year. In this climate deal, they commit to net-zero emissions from crypto mining by 2030, primarily by switching to renewable energy sources.
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