Contrary to some expectations, Beijing’s crackdown on the crypto mining industry has increased Bitcoin’s carbon emissions, researchers have alleged. Leaving China, miners also left behind its eco-friendly hydropower and are increasingly relying on energy generated by fossil fuels, they claim.
Bitcoin Mining would be less green since the exodus of miners from China
Cryptocurrency mining has become a dirtier process after the Chinese government effectively banned bitcoin mining in the People’s Republic, according to a study published in the Joule newspaper. The share of renewable energy used to power mining operations fell from nearly 42% to around 25% last August, the study insists.
It has been estimated that Bitcoin produces more than 65 megatons of carbon dioxide annually. The amount exceeds the total carbon emissions of a country like Greece, for example, which in 2019 registered less than 57 megatons of CO2. One of the authors, Alex de Vries, told the BBC:
We see the network becoming less green than ever.
Speaking to Bloomberg, he elaborated that the relocation of mining companies to other countries such as the United States and Kazakhstan has led to a reduction in the use of renewable energy sources. This made bitcoin production less friendly to the environment as it resulted in the increase of its carbon intensity by about 17%.
De Vries is the founder of Digiconomist.net, a platform billing itself as “dedicated to exposing the unintended consequences of digital trends” and publishing the Bitcoin Electricity Consumption Index. He is a researcher at the School of Business and Economics of the Vrije Universiteit, Amsterdam, and also an employee of the Dutch central bank. His estimates on Bitcoin’s energy consumption have been disputed by crypto media and community members, but cited by mainstream publications.
Migration to the U.S. has expanded the use of fossil fuels, especially natural gas, as a relatively small portion of the nation’s electrical energy is sourced from renewables, the latest report co-authored by De Vries claims. And moving to Kazakhstan often leads to utilizing electricity from power stations burning what’s known as “hard coal,” polluting more than the Chinese plants that miners worked with outside the wet season.
China banned crypto-related activities such as trading in 2017, but the government only interfered with mining last spring. In May 2021, the State Council moved to clamp down on the industry following President Xi Jinping’s pledge to achieve carbon neutrality within the next four decades. The crackdown has since spread to provinces like Sichuan where miners had access to hydroelectricity.
Industry groups had been more optimistic about the use of renewables in the minting of digital currencies, BBC noted in its article. It quotes an older estimate made by the Bitcoin Mining Council, according to which the “global mining industry’s sustainable electricity mix had grown to approximately 58.5%.”
Meanwhile, in Europe, countries like Sweden and regulators like the European Securities and Markets Authority (ESMA) have recently raised concerns about the growing use of renewable energy for bitcoin mining. They have called for an EU-wide ban on energy-intensive mining methods.
On Friday, news came out that the European Parliament canceled a scheduled vote on the bloc’s new crypto regulations after a proposal to prohibit proof-of-work mining found its way to the draft Markets in Crypto Assets (MiCA) framework and sparked negative reactions from the industry.
