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Cryptocurrency Mining Has Worsened For The Climate After China Ban


of china blow to cryptocurrencies The past year has turned the Bitcoin world upside down, triggering a mass exodus of “miners” to new locations around the world using power-hungry computers to mine or create new Bitcoins.

Now, research has found that migration is likely crypto mining. consumes more electricity than many countries, even worse for the climate. According to peer-reviewed research in the journal Joule, the Bitcoin network’s use of renewable energy sources such as wind, solar or hydropower has dropped from an average of 42 percent in 2020 to 25 percent in August 2021.

One possible reason: Bitcoin miners lost access to hydroelectric power from regions in China that run their computers on cheap, abundant, and renewable energy during the rainy summer months. Instead, significant numbers of miners emigrated to nearby Kazakhstan and to the farther United States.

Miners in these countries use more fossil fuels, mostly coal in Kazakhstan and natural gas in the Americas. Coal and natural gas are drivers of climate change because burning fossil fuels pumps massive amounts of planet-warming carbon dioxide into the atmosphere.

Researchers from Vrije Universiteit Amsterdam, Technical University of Munich, ETH Zurich and Massachusetts Institute of Technology estimate that Bitcoin mining could be responsible for about 65 megatons of carbon dioxide per year, comparable to Greece’s emissions. “It is bad news for Bitcoin holders because their assets have become even more polluted,” said Alex de Vries, co-author of the paper.

“There was a lot of optimism that China banning Bitcoin mining would make mining greener,” Mr de Vries said. “But the truth is, it was already dirty business and it just got worse.”

The latest research adds to the debate about the environmental impacts of Bitcoin mining at a time when the cryptocurrency’s position in mainstream finance is on the rise. Bitcoin mining in particular has come under scrutiny because it is designed to become more difficult as more miners participate, making each Bitcoin mining more energy-intensive. (Another cryptocurrency, Ethereum, is working on an alternative method that will use much less energy.)

Various estimates have been made in the past regarding the share of renewable energy sources used by Bitcoin miners. A questionnaire The Cambridge Center for Alternative Finance put the global average renewable energy used in mining at around 40 percent. The Bitcoin Mining Council, an industry group, said the number is close to 60 percent. And digital asset investment firm Coinshares, estimated 73% of the electricity used by Bitcoin miners comes from renewable sources.

One of the biggest reasons for these differences is that it is difficult to pinpoint the exact locations of Bitcoin miners, by far the largest cryptocurrency. For several years, Cambridge researchers have fitted data on the global distribution of miners based on information gathered from four “mining pools” or groups of miners that combine computational resources. However, this only covered 44 percent of the total Bitcoin mining activity as of October 2021.

The new research used Cambridge location data and matched that data with data on how carbon-intensive electricity generation is in that country.

For the United States, the study used data from Foundry USA, a mining pool that allows for a more detailed breakdown of miners’ locations, important for how electricity is produced and how much renewable energy is included as part of the energy mix. varies across the country. But for other countries this breakdown was not available.

Chris Bendiksen, Bitcoin research lead at Coinshares, said his firm uses location data gathered from financial statements and proprietary industry data to arrive at renewable usage estimates. It also explained the fact that a growing number of miners in the US are signing contracts with natural gas drillers to use the excess gas that would otherwise be “fired” – intentionally incinerated as waste – or simply released into the atmosphere. not burned or used.

In the end, he said, the purpose of the Bitcoin industry is aligned with climate goals. “I think we all agree that we need to move away from fossil fuels. “We need to focus on building the grid and decarbonizing it,” he said.

Bitcoin could even support this goal by creating demand for any excess power produced by renewable sources, but shutting down instantly during a supply squeeze. (However, much renewable energy is rare in most of the world.)

Benjamin A. Jones, an assistant professor of economics at the University of New Mexico, whose research includes the environmental implications of crypto mining, said the recent findings appear consistent with what he expected, given the migration of crypto miners from China, which they have access to. for renewable hydropower.

“It’s not a shock to me that when China bans mining there, miners leave and go to other countries, and these other countries tend to have less usable spare renewable capacity for mining camps,” he said. “If true, their meaning is that Bitcoin mining is moving in the wrong direction.”



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