A report from CoinShares looks at the state of the Bitcoin (BTC) mining network. It indicates that the carbon emissions related to the production of the largest cryptocurrency would represent 0.08% of total emissions in the world. A figure that tends to contextualize the real impact of Bitcoin in the face of climate issues.
An overview of the costs associated with Bitcoin mining
Published in recent weeks, the CoinShares report offers an overview of the Bitcoin network, in particular the energy cost of mining. In it, we learn that for the year 2020, the cryptocurrency consumed 75 TWh of electricity, and 82 TWh in 2021. This corresponds to 0.05% of the total energy consumption in the world.
That’s a small share all told, according to CoinShares:
“[Energy consumption] seems to us to have a small cost in exchange for a global currency system, and if you look at the global energy balance, it looks like a negligible amount.”
The report further notes that China’s mining ban has reshuffled the deck, with new countries emerging as leaders in hashrate production. The three largest producers are now the United States, Kazakhstan and Russia, so they are also logically those who use the most electricity:
Carbon emissions related to Bitcoin mining deciphered
Another highlight of this report is the carbon emissions associated with Bitcoin mining. According to CoinShares, the Bitcoin mining network would have emitted 36 megatons (Mt) of CO2 in 2020, and 41 megatons in 2021. At the same time, reductions in flaring emissions will lower the total by 2.1 megatons, to 39 megatons for the year just ended.
In the end, the share of carbon emissions from Bitcoin mining is very small: it represents 0.08% of total global emissions. An amount that also seems negligible for CoinShares:
“In a global context, this is an insignificant addition, […] amounting to 1/1000th of the total.”
Carbon emissions: Bitcoin VS other systems
For comparison, the emission and production costs of fiat currencies amount to 8 Mt per year, but this of course does not include the entire banking system. If this is taken into account, the emissions from fiat currencies would amount to 130 Mt per year. Gold mining emits between 100 and 145 Mt per year.
Some will say that the main goal is to reduce all emissions, and that Bitcoin’s share will always be too large, given the climate emergency. One would agree, and fortunately the network is trending toward decarbonization, according to CoinShares:
“The carbon intensity of 2022 will likely be lower than those of 2020 and 2021. The long-term effect of the Chinese ban will be a reduction in carbon intensity.”
The report thus helps mitigate the common notion that Bitcoin is an environmental disaster on its own, and that it is responsible for many ills. When compared to other industries and payment systems, its cost is indeed low.
And while the goal should of course be to reduce all types of carbon emissions, it cannot be denied that Bitcoin has been used as an ecological scarecrow of late. Its operation must therefore be examined in a global context to be judged more accurately.
