Bitcoin More Environmentally Friendly Than EV Industry
Far from being a dangerous source of pollution, Bitcoin mining uses more sustainable power than any other major industry.
A recent research paper suggests that Bitcoin mining might be one of the world's greenest industries in terms of sustainable energy use.
The report, written by CH4 Capital co-founder Daniel Batten, notes that previous research on Bitcoin's energy user is flawed and almost two years out of date. Companies typically turn to media reports to gauge Bitcoin's ESG impact, and it turns out that many of the most negative articles rely on studies conducted by the Cambridge Centre for Alternative Finance (CCAF). However, their research has not been updated in 22 months. Batten's own research tells a very different story.
There are 52 offgrid mining companies that we know of. To reiterate, these are the miners that Cambridge model does not include. They represent 28% of all mining by hashrate. They are almost 80% powered by sustainable energy.
This should come as little surprise, since these actors are generally mining off-grid in order to access cheap electricity, which is typically sustainable (primarily solar and wind).
A Fast-Changing—And Unchanging—Picture
To give a sense of how fast things can move in that time, Batten highlights the case of Kazakhstan. When CCAF's model was last accurate, the country accounted for over 13% of all Bitcoin mining. Today, it is less than 1%. However, it is off-grid mining that is making the most different to the network, helping to bring down average carbon emissions and clean up the industry.
Bitcoin miners' growing use of sustainable power mean that Bitcoin's total mining emissions have not increased in four years, despite hashrate having soared in this time.
ESG: A Key Driver Of Policy
Important policies have been formulated, or guided, by Bitcoin's supposed energy use. For example, the EU proposed a ban on proof-of-work mining, and the US government has stated that more evidence is required that emissions will remain under control with greater adoption for them to create favorable Bitcoin policies.
Batten argues that we now have the required data. Over the last 4 years, hashrate has grown over 400%. Bitcoin's price has increased over 160%. The total number of users has almost tripled. And yet, emissions have not grown.
This makes Bitcoin the only global industry where industry growth has not led to emission growth.
Bitcoin's use of fossil fuels totals around 46% of all energy used by the network. No other major industry has emissions this low. Even the electric vehicle industry is higher, with almost two-thirds of electricity used being generated by fossil fuels.
Overall, almost 54% of all Bitcoin mining uses sustainably-generated power—making it not the villain that mainstream media has made it, but a trailblazer and an example for other industries that claim to be green but are not.
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