Bitcoin (BTC) Mining Sustainable Energy Use Jumps Amidst Ongoing Scrutiny

Key Insights:

• Bitcoin (BTC) mining was back in the spotlight this week, with the Bitcoin Mining Council publishing new numbers
• This week’s publication reported a sharp increase in the use of sustainable energy to power Bitcoin mining.
• Just last week, US lawmakers requested the EPA to investigate possible infringements.

Negative sentiment toward Proof-of-Work mining and Bitcoin (BTC) mining has shown no signs of shifting.

Lawmakers in the US and the EU continue to raise concerns over the impact of Proof-of-Work mining on the environment.

The concerns come despite mixed data sets that suggest Bitcoin mining may not be as damaging as some suggest.

This week, the Bitcoin Mining Council (BMC) published its quarterly Global Bitcoin Mining Data Review.

Bitcoin Mining Council Talks of Rising Use of Sustainable Energy

On Monday, the Bitcoin Mining Council published its Q1 2022 Bitcoin Mining Data Review.

According to the report,

• Bitcoin mining uses an insignificant amount of global energy (16 bps) and creates negligible carbon emissions (8 bps).
• Mining efficiency is on the rise, with the mining hashrate up 23% year-on-year, while energy usage is down 25%.
• Bitcoin has a 58% sustainable energy mix, making it the industry leader.
• Bitcoin energy consumption on the world electrical grid is just 247 TWh (0.16%) compared with a worldwide total energy generation of 154,750.

According to the University of Cambridge, Bitcoin would be a top 30 energy consumer if it were a country.

• Bitcoin mining produces 0.03 BMt (0.085%) of CO2 versus a global production of 34.8 BMt.

More interestingly, the report shows that Bitcoin mining has the highest sustainable energy mix of any single nation.

Compared with other industries, the figures were more aligned with recent data from CoinShares than governments globally.

US air-conditioning, finance & insurance, and healthcare had significantly higher power consumption numbers.

In conclusion, the report noted that,

“Bitcoin mining is guaranteed to be dramatically more energy efficient in the next 8 years.”

BMC Numbers are More Aligned with CoinShares than with US Lawmakers

In January, Proof-of-Work mining and Bitcoin came under intense government scrutiny.

The Subcommittee on Oversight and Investigations of the Committee on Energy and Commerce held a hearing titled ‘Cleaning Up Cryptocurrency: The Energy Impacts of Blockchains.”

The briefing memorandum provided some PoW mining statistics to generate debate through the hearing. These included,

• The estimated annual energy usage of the Bitcoin network grew from 77.78 Terawatt-hours (TWh) on January 02, 2021, to 198 TWh on November 26, 2021.
• Over the same period, the Ethereum network’s annual energy usage grew from 14.81 TWh to more than 92 TWh.
• A single ETH transaction added more than 90 pounds of CO2 to the atmosphere, while a single BTC transaction added more than 1,000 pounds.
• The global 2021 CO2 emissions of ETH and BTC mining are equivalent to tailpipe emissions from more than 15.5m gasoline-powered cars on the road each year.

In addition to the above numbers, there were also several other influencing factors for lawmakers to consider,

• As part of a goal to be carbon neutral by 2060, China banned Bitcoin in June 2021.
• According to Cambridge Centre for Alternative Finance, the United States is the largest Bitcoin mining nation.
• In April 2021, President Joe Biden set greenhouse gas reduction targets. These included a 50-52% reduction from 2005 levels in economy-wide net greenhouse gas pollution by 2030.
• The U.S has a net-zero emissions target of 2050.

With the U.S President’s emissions goals in mind, January’s subcommittee hearing saw Democratic party members stand “staunchly anti-crypto.”

Since the January hearing, the crypto community has responded with its crypto mining statistics.

CoinShares Delivers a Different Take on PoW Mining

In February, we reported new mining statistics that questioned the numbers from the briefing memorandum and those used by other anti-crypto lawmakers.

Key statistics from a CoinShares paper titled “The Bitcoin Mining Network, Energy, and Carbon Impact” included,

• The Bitcoin mining network emitted 36 Mt of CO2 in 2020 and 39 Mt in 2021, accounting for less than 0.08% of a global total of 49,360 Mt of CO2 emissions.

CoinShares provided an industry breakdown of CO2 emissions for comparison. These included,

• Emissions estimates for the minting and printing of fiat currency sit at approximately 8 Mt of CO2 emissions per year.
• The gold industry generates between 100 and 145 Mt of CO2 emissions annually (estimated).
• Global banking system emissions are around 130 Mt of CO2 emissions each year.

With such a disparity in numbers, the Environmental Protection Agency (EPA) may provide some further input for lawmakers to make a more informed judgment on PoW mining.

This week’s BMC publication is unlikely to end the debate and the scrutiny. The BMC represents 44 Bitcoin mining companies that claim to account for 50% of the global Bitcoin hashrate. The 44 are likely to be the ‘Best in Class” mining companies.

Last month, the European Parliament averted a Bitcoin crisis by voting no to a proposed ban on Proof-of-Work (PoW) cryptos. A PoW mining ban would outlaw Bitcoin, Ethereum (ETH), and other PoW cryptos.

On Wednesday, US lawmaker scrutiny on crypto mining returned, with lawmakers writing to the EPA to investigate possible crypto mining infringements of environmental laws.