New Study Invalidates Bitcoin Mining’s High Carbon Emission Theory
Bitcoin (BTC) mining represented just 0.04 percent of global primary energy consumption and 0.1 percent of global carbon emissions in 2020, according to a new study “Bitcoin Net Zero” published and conducted by New York-based technology and financial services firm NYDIG.
The study provides substantive insights on Bitcoin’s carbon footprint and contextualizes Bitcoin mining’s electricity consumption. It comes to a conclusion that Bitcoin provides more value that outweighs the high energy costs and carbon emissions related to its mining.
Bitcoin relies upon a ‘proof of work’ system, through which miners compete to assemble transactions in a shared global ledger. This process is the primary driver of Bitcoin’s energy costs and associated carbon emissions.
The study estimates that Bitcoin consumed 62 Terawatt-hours or TWh of electricity in 2020, which resulted in 33 million tonnes of carbon dioxide emissions, insignificant in global terms, representing just 0.04 percent of global primary energy consumption and 0.1 percent of global carbon emissions.
Bitcoin’s electricity consumption is very low compared to other energy-intensive modern conveniences, such as domestic refrigeration (630 TWh) and domestic tumble dryers (108 TWh).
The study then projects the future growth of Bitcoin mining based on data from 2020, which is calculated based on the historical electricity consumption of Bitcoin miners. The volume of emission is calculated depending on fluctuations in Bitcoin’s price, mining difficulty and energy consumption.
As a base case, the study reveals that if the price of Bitcoin reaches $60,000 by 2030, the electricity consumption and associated emissions will peak to around 120 TWh and 47 Metric tons of carbon dioxide equivalent or MtCO2, respectively, in 2024, before declining rapidly.
By 2028, emissions will be below a net-zero pathway, a linear reduction in carbon emissions from 2020 levels to zero by 2050.
According to the study, in a high price scenario of Bitcoin reaching $490,000 by 2030, or 45 times its average 2020 price, electricity consumption will peak in 2027 at 11 times its 2020 level, and associated carbon emissions will be seven times their 2020 level.
However, emissions will fall rapidly after 2027, reaching 22 MtCO2 by 2040. Even at the peak of the high price scenario, Bitcoin’s emissions will only account for 0.9 percent of global carbon emissions, the study reveals.
Meanwhile, many miners are increasingly focusing on minimizing the carbon emissions associated with their activities by purchasing offsets, procuring renewable energy, favoring locations with renewable energy, and using otherwise wasted energy, such as curtailed hydro power and flared gas.
As concerns over the enormous carbon-footprint and environmental sustainability of bitcoin mining play out more vigorously, existing investors would be earnestly hoping the emission related tweet-storms end up as much ado about nothing.
Tesla CEO Elon Musk had in recent times given wings to an apparent effort to improve the green credentials of the Bitcoin mining process with a tweet. He had criticized the energy profile of Bitcoin mining and the related carbon emissions.
Musk went to the extent of saying he would no longer accept Bitcoin against the sale of Tesla electric vehicles due to its huge consumption of fossil fuels during the Bitcoin mining process.
Musk also met up with a consortium of leading Bitcoin miners such as Riot Blockchain, Blockcap, Hut 8 and Michael Novogratz’s Galaxy Digital, to discuss the environmental impact of the mining industry and to bring transparency to the energy usage.
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