The Bitcoin mining hash rate hit a new all-time high this past month of 80 EH/s, which is equivalent to 80,000,000 TH/s. This hash rate represents an ensemble of mining rigs spread all over the world that are performing hashing operations 24/7, in order to secure and sustain the Bitcoin network and to earn profits via block rewards. Bitcoin mining is highly competitive, and as long as Bitcoin’s price continues to rise long term, then Bitcoin’s hash rate will only increase from here.
China has recently proposed to eliminate Bitcoin mining, saying it uses an incredible amount of electricity and is wasteful. This would have a major impact on the distribution of Bitcoin mining in the world since most Bitcoin miners are located in China. That being said, China has not banned Bitcoin mining yet.
Also, speculation that Bitcoin mining contributes to global warming has led to numerous Twitter posts like the one below.
— Marlene Katz (@marlene676) July 25, 2019
The following article investigates whether Bitcoin mining truly is detrimental to the environment, as well as explores the solutions that could mitigate environmental damage.
A Single Mining Rig Can Release 14.8 Metric Tons Of CO2 Per Year
To put Bitcoin mining energy usage into perspective, the Antminer S17 uses 2,385 Watts of power to generate 53 TH/s, which is equivalent to 20,893 Kilowatt Hours (kWh) used per year. This is 100% more than the 10,400 kWh an average American household uses in a year.
A calculator provided by the Environmental Protection Agency (EPA) indicates that the 20,893 kWh used per year by an Antminer S17 requires 34.2 barrels of oils, 1,662 gallons of gas, or 16,152 pounds of coal to be burned, releasing 14.8 metric tons of Carbon Dioxide (CO2) into the atmosphere as well as other pollutants.
The Basic Science Of Anthropogenic Global Warming
Anthropogenic CO2 emissions are the primary cause of global warming. This is because CO2 is a greenhouse gas, meaning that it blocks thermal radiation emitted by the Earth from escaping into space, causing the average temperature of the Earth to increase.
Chart showing CO2 measured at Mauna Loa Observatory courtesy of the Earth System Research Laboratory (ESRL) and the National Oceanographic and Atmospheric Administration (NOAA)
There is no doubt that the amount of CO2 in the atmosphere is increasing significantly long term due to human activities, as shown by measurements of atmospheric CO2 on top of Hawaii’s Mauna Loa Volcano, and this long term rise in CO2 corresponds to a long term rise in Earth’s average temperature.
The question is how much of total global CO2 emissions can be attributed to Bitcoin mining?
Bitcoin Mining Accounts For Roughly 0.1% Of Total Global CO2 Emissions
Assuming that the entire Bitcoin mining network is comprised of Antminer S17s, it would take 1.51 million Antminer S17s to yield the 80 EH/s hash rate of the Bitcoin network. This would consume 31.5 billion kWh of electricity per year, releasing 22.278 million metric tons of CO2 into the atmosphere every year.
According to the United States Geological Survey (USGS), the automotive and industrial sectors of the economy release 24 billion tons, equivalent to roughly 22 billion metric tons, into the atmosphere each year. A more comprehensive estimate is that humans release 40 billion metric tons of CO2 per year. This means that CO2 emissions from Bitcoin mining account for approximately 0.05% to 0.1% of total human emissions.
This calculation makes a couple of critical assumptions. It is assumed that all Bitcoin mining rigs are Antminer S17s when in reality there are many different types of rigs. The Antminer S17 is top of the line, and probably more energy efficient than most mining rigs, so the amount of electricity usage and CO2 emission due to Bitcoin mining is likely underestimated in this example.
A website called Digiconomist attempts to estimate the CO2 emissions of the Bitcoin network by estimating the total amount of money that miners spend on electricity, and this is derived from total Bitcoin mining revenue via a series of assumptions.
Digiconomist estimates that Bitcoin’s energy consumption is between 39.7 billion and 73.1 billion kWh per year, releasing 34.7 million metric tons of CO2 into the atmosphere per year. it also estimates that Bitcoin’s total energy consumption is similar to the nations of Venezuela and Austria.
Based on the data discussed in the article so far, it seems safe to say that Bitcoin mining uses tens of billions kWh of electricity per year, releasing tens of millions of metric tons of CO2, although this is only a tiny fraction of the amount of CO2 emitted by all human activities.
Renewable Energy Decreases The Environmental Impact Of Bitcoin Mining
However, an incorrect assumption that is used for both the Antminer S17 and Digiconomist calculations, is that Bitcoin mining solely relies on fossil fuels for electricity. Solar power, wind power, geothermal power, nuclear power, and hydrothermal power are all clean energy sources that can be used to power Bitcoin mining.
For example, Soluna purchased a 37,000-acre swath of land in Western Sahara, an ideal location for generating electricity via wind power. Soluna hopes to have installed 36 megawatts of power generating capacity by 2020 and to have 900 megawatts installed within the next 5 years. All of this electricity will be used by an on-site cryptocurrency mining farm.
Another example is Northern Bitcoin, which uses the hydrothermal energy of a glacial fjord to power an underground Bitcoin mining farm. Additionally, the coldness of the fjord significantly reduces cooling costs.
In fact, a CoinShares study from June 2019 claims that 74.1% of Bitcoin mining is powered by renewable energy. The study found that Bitcoin mining concentrates near sources of abundant renewable energy, such as hydrothermal power in China and geothermal power in Iceland since electricity costs are lower in such regions.
Proof of Capacity (PoC) And Proof of Stake (PoS) Reduce Energy Usage
Aside from reducing the environmental damage caused by Bitcoin mining via the use of renewable energy, cryptocurrency miners can also choose to mine a different cryptocurrency with a more energy-efficient algorithm.
For example, Proof of Stake (PoS) does not require any mining rigs and barely uses any electricity. This is why the Ethereum Foundation is planning on switching Ethereum to PoS eventually, since that would get rid of the Ethereum mining community, and would reduce the environmental impact of the Ethereum network to basically zero.
The caveat is that PoS generally centralizes power into the most wealthy holders of a cryptocurrency since the amount of cryptocurrency in a wallet determines the amount of voting power. This is less ideal than the highly decentralized Proof of Work (PoW) algorithm that Bitcoin uses.
A better option than PoS is Proof of Capacity (PoC), which uses hard drives to mine cryptocurrency. PoC uses practically no electricity in comparison to PoW, but simultaneously maintains a decentralized network of miners, versus PoS which gets rid of the decentralized network of miners.
To be clear, it is highly unlikely that Bitcoin will ever stop using PoW, since PoW is essential for the decentralization of the Bitcoin network. Miners do have the option however of mining a different cryptocurrency that uses far less electricity.
Bitcoin Mining Has A Relatively Small Impact On The Environment, And There Are Solutions To Further Reduce This Impact
In summary, Bitcoin mining releases roughly 0.1% of total man-made CO2, which means it is responsible for a small fraction of anthropogenic global warming. However, it is still important to try and reduce CO2 emissions from Bitcoin mining. Also, when fossil fuels are burned, other toxins besides CO2 are released. One solution is renewable energy, which is widely used by Bitcoin mining farms and drastically lowers the environmental impact of Bitcoin mining. Another solution is to mine cryptocurrencies that have algorithms which are less energy intensive, such as PoS or PoC.
As for the future, it seems likely that the energy consumption of Bitcoin mining will increase long term, but this does not have to translate to increased environmental damage, as long as Bitcoin miners gravitate towards renewable energy sources.
Image Courtesy: Pixabay