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The Bitcoin network’s Carbon emission rate is up 17 percent seven months after Chinese authorities banned cryptocurrency and Bitcoin mining within its borders.
A new research study by Alex de Vries—the founder of Bitcoin Energy Consumption Index, Ulrich Gallersdörfer—a researcher in the Department of Informatics at the Technical University of Munich, and Lena Klaaßen–a Ph.D. student in the Climate Finance and Policy group at ETH Zurich, published on February 25 pointed out the spike in Carbon emission linked to Bitcoin mining activities.
Bitcoin Energy Requirements Unsustainable
The Bitcoin network’s energy efficiency has remained a contentious topic ever since BTC prices first surged to $20k before resuming the uptrend from 2020, peaking at $69k in late 2021. According to critics, while Bitcoin is powered by a beneficial technology and promotes financial inclusion by remittance lowering costs, its operation is unsustainable and harms the environment, unwinding meaningful progress made by the world’s governments in tackling climate change.
Bitcoin is the first blockchain application, proving the technology’s concept. Using a proof-of-work consensus algorithm for transaction confirmation, the network demands the participation of operators from across the globe. These supporters are incentivized.
By operating rare and expensive Bitcoin mining gear and pooling their resources—as individuals—or operating big Bitcoin mining farms, they receive valuable BTC every time their pool is selected to confirm a block of transactions. In the fourth epoch, the Bitcoin network rewards 6.25 BTC ($240.2k at spot rates) for every block mined after roughly 10 minutes.
However, the proof-of-work consensus algorithm incentivizes cut-throat miner competition since the network only rewards a pool that funnels the highest computing power. As a result, over the years, the total hash rate of Bitcoin has been on an upward trajectory, directly tracking the price of Bitcoin.
By late February 2021, trackers show that the Bitcoin network consumes the same energy as the whole of Thailand at 204.50 TWh. With these colossal energy requirements, the network also emits 114.06 MT of CO2, the same as the Czech Republic.
Bitcoin Mining Crackdown in China
Chinese authorities cracked down on Bitcoin and cryptocurrency mining operations in June 2021, saying they were preventing frenzied crypto speculation. Nonetheless, this coincided with their piloting of the Digital Yuan. During that time, over 70 Bitcoin mining farms were forced to shut down in Sichuan alone.
Subsequent operations in other Chinese provinces saw the Bitcoin hash rate shrink by more than 50 percent as miners relocated to supportive territories, mainly the United States, Kazakhstan, and Russia. The Hash rate has since recovered and is at 173 EH/s days after rising to 223 EH/s, according to trackers. Meanwhile, the United States has emerged to be the biggest country to host Bitcoin mining operations.
Will Bitcoin emit more Carbon?
Trading at over $38.5k when writing, Bitcoin prices are steady and could help revive more deployment of Bitcoin mining equipment, boosting hash rate. It remains unclear whether the Bitcoin mining network will continue emitting more Carbon.
Crypto and Bitcoin mining proponents are adamant that the network is powered by green energy sources, mostly renewables. In their assessment, Bitcoin is also greener than traditional transactional platforms like banks, which cumulatively expend more energy.