The carbon footprint of the Bitcoin mining industry has not increased at the same rate as the expansion of the Bitcoin network, making it a remarkable achievement in the eyes of Bloomberg analyst Jamie Coutts. Coutts argues that this development could attract a wave of institutional and sovereign investment capital. According to data shared by Coutts on September 20th, the sustainable energy mix used in Bitcoin mining has been steadily increasing since 2021 and now accounts for over 50% of the network’s energy consumption. As a result, emissions from mining have slowed down despite the network’s growth.
Coutts highlights the relationship between the growth of the Bitcoin network and the global shift towards transitioning from fossil fuels. He believes that this synergy can drive further investment in Bitcoin. Energy costs make up a significant portion of mining operations, accounting for more than 50% of expenses. The pursuit of the cheapest energy sources has not only contributed to the network’s growing hash rate but also reduced the industry’s carbon intensity.
The analyst envisions a future where the Bitcoin network scales to accommodate hundreds of millions of users. In this scenario, the global carbon emissions impact would be minimal, positioning Bitcoin as a technology that can play a pivotal role in the transition away from fossil fuels.
It is important to distinguish between energy emissions and carbon intensity in relation to Bitcoin mining. Energy emissions refer to the greenhouse gases and air pollutants emitted as byproducts from different energy sources and activities. On the other hand, carbon intensity measures the cleanliness of the electricity used in mining.
The use of sustainable energy sources in Bitcoin mining has been a subject of debate. Cambridge University’s model, which has not been updated since January 2022, suggests that only 37.6% of mining is powered by sustainable energy sources. However, climate technology venture investor and activist Daniel Batten argues that the actual percentage is above 50%. Batten points out that the Cambridge figures do not include off-grid mining and methane mitigation in their calculations.
Batten also reported earlier this year that the intensity of Bitcoin mining emissions has reached its lowest-ever level. He predicts that by December 2024, the Bitcoin network will achieve carbon neutrality and by 2030, it will mitigate 10 times more emissions than it produces.
Overall, the increasing use of sustainable energy sources in Bitcoin mining and the potential for the network to become carbon neutral have significant implications for the industry. The environmental impact of Bitcoin mining is a crucial consideration for investors and stakeholders, and the current trends in emission reduction provide a promising outlook for the future.