4 minuti di letturaBitcoin’s Proof of Work consensus mechanism is energy-intensive (but not as much as some would have you believe). Can the network improve its environmental footprint?
This is the second chapter of our series on crypto and energy. After covering the basics of crypto energy consumption, we’ll now tackle BTC’s ongoing advances towards a greener network.
Btc Energy Sources: A Global and Balanced Energy Mix
In order to properly study BTC’s energy consumption and environmental impact, we need to take a closer look at where, and how, miners set up shop.
Bitcoin mining is carried out all over the world. Miners look for regions with cheap energy, as this is their main source of cost. In January 2022, the United States was the major carbon emitter (47%), followed by Kazakhstan (22%).
Mining’s carbon footprint is very location dependent. It will logically be higher in fossil fuels (coal and oil) heavy regions such as Kazakhstan, Montana, Kentucky, and Alberta, and lower in hydropower-rich areas such as Norway, Iceland, Sweden, Quebec, and Manitoba.
In 2021, the Chinese government banned all crypto-related activities, including Bitcoin mining. This modified Bitcoin’s electricity generation mix, as Chinese miners were reliant on coal and hydropower, with strong seasonal variations. The network energy mix is now more balanced than ever, combining coal (35%), gas (24%), hydro (21%), nuclear (11%) and wind (4%).
Looking for more details? Head over to our Bitcoin Mining Report for further analysis.
More Efficient Hardware
Application-Specific Integrated Circuits (ASICs) are one of the key pieces of hardware used in BTC mining. And just like any technological equipment, ASICs are continuously evolving - and improving. CoinsShares’ research team estimates that the electricity cost per hash (a cryptography unit) is consistently falling, and they expect this trend to continue.
This causes a gradual and persistent shift in the hardware pool from older inefficient units to newer more efficient ones, with miners replacing their outdated hardware with more efficient ASIC units.
Limiting Energy Waste: Bitcoin’s Potential Re-Use
In addition to the energy sources we listed in previous sections, Bitcoin mining can harness a more unconventional reserve: flared gas. Oil field miners operate close to industrial areas which produce oil or natural gas, generating dry natural gas as a byproduct. Selling this gas is not profitable, so it’s either vented or flared. This causes strong CO2 emissions.
This is where Bitcoin miners come in: as they are located close to the oil/gas rig, they can use the gas to power their operations at a lower cost. This way, they reduce harmful emissions while offering a new life to what was previously seen only as waste.
According to our research, for each tonne of CO2 generated by an oil field miner, approximately 0.11 tonnes of methane is prevented from leaking into the atmosphere. Methane is extremely CO2 heavy - each tonne of methane equals 31 tonnes of CO2 (over a hundred years). So each tonne of CO2 emitted by an oil field miner also removes 3.4 tonnes of CO2-equivalent emissions.
This is still a niche practice, but we expect it to keep growing in the coming years. If flared gas takes a large enough share of the mining energy input, the entire mining network could become carbon negative.
Conclusion: Promising Developments… and Other Blockchains
BTC mining is headed in the right direction: the hardware keeps upgrading, and miners are getting creative with their energy sources. BTC mining’s impact, of course, depends on the energy mix as a whole. As the world moves towards renewable energy, so will BTC mining.
Meanwhile, other cryptos have made even greater strides, and reduced their emissions to near zero. How? This is what we will see in the third, and final, article of this series: welcome the PoS revolution.
