A recent study conducted by the United Nations has revealed a direct correlation between the price of Bitcoin (BTC) and the energy consumption of mining operations. The study, which evaluated the activities of 76 Bitcoin mining nations during the 2020-2021 period, found that the global Bitcoin mining network consumed a staggering 173.42 terawatt-hours of electricity. This increase in energy consumption was triggered by a 400% surge in Bitcoin’s price, which led to a 140% rise in the energy consumption of the mining network.
At the time of the study, fossil energy sources accounted for 67% of the electricity used for Bitcoin mining. To address concerns about the environmental impact of mining, crypto entrepreneurs have started taking proactive measures to increase their reliance on green energy sources. The study found that hydropower satisfied over 16% of the total electricity demand of the global Bitcoin mining network, while nuclear, solar, and wind energy sources provided 9%, 2%, and 5% respectively.
However, the UN report was met with criticism from members of the crypto community who questioned its use of the Mora et al. 2018 paper. This paper had overestimated the carbon emission levels of Bitcoin mining rigs by including unprofitable mining rigs in their analysis. The authors of the UN report were accused of ignoring rebuttals to the Mora et al. paper, leading to concerns about the accuracy of their findings.
Notwithstanding these criticisms, the UN report highlighted the top 10 Bitcoin mining nations at the time – China, United States, Kazakhstan, Russia, Malaysia, Canada, Germany, Iran, Ireland, and Singapore – as being responsible for the majority of the global carbon, water, and land footprint of Bitcoin. These nations accounted for 92%-94% of the overall environmental impact of Bitcoin mining.
In a bid to reduce the carbon footprint of Bitcoin and the wider crypto ecosystem, there has been a global push for greener alternatives to fulfill the grid demand. One recent example of this is Genesis Digital Assets Limited, a mining and data center company that opened a new data center in Sweden running on the country’s surplus of renewable energy. By utilizing energy sources such as hydropower, Sweden, Finland, and Norway are able to offer negative energy prices from time to time, making them attractive locations for Bitcoin mining.
Furthermore, Bitcoin mining equipment manufacturers are continuously striving to develop more energy-efficient hardware. At the World Digital Mining Summit, Bitmain introduced its efficiency-focused Antminer S21, while TerraWulf’s chief operating officer, Nazar Khan, emphasized the importance of locating Bitcoin mining loads in places that facilitate the decarbonization process.
Although the UN report has drawn attention to the environmental impact of Bitcoin mining, it is essential to consider different perspectives and further research in order to fully understand the true extent of this impact. As the crypto industry continues to evolve, it is expected that efforts to mitigate environmental concerns will remain at the forefront, leading to the adoption of more sustainable practices in Bitcoin mining and other crypto-related activities.