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Bitcoin (BTC) energy requirement has been the highest source of concern regarding the crypto industry. During mining, its high consumption rate negatively impacts the environment. This issue could cause the government to ban BTC mining if no solution is preferred.
Data shows Bitcoin expends nearly 150 tetra watt-hours of electricity yearly, which is more than the energy consumption of some countries. Carbon dioxide emissions from this level of energy production are about 65 Megatons yearly.
The statistical data has placed Bitcoin as one of the most significant contributors to global pollutionYet, despitete the growing concerns, the energy consumption rate in the crypto mining industry keeps increasing.
Mining companies had to look for more eco-friendly energy sources or build more facilities to generate additional energy.
China Crypto Mining Ban Impacted BTC Energy Consumption
Natural gas and nuclear energy are gradually becoming the most used energy source for Bitcoin mining. As a result, the Cambridge Centre for Alternative Finance (CCAF) updated its Cambridge Bitcoin Mining Electricity Consumption Index (CBECI) on Tuesday.
The data shows that fossil fuels such as natural gas and coal account for over 62% of Bitcoin Electricity mix in January 2022. Other energy sources in the Bitcoin electricity mix constitute 38% of the total energy mix.
The study further revealed that coal accounted for about 37% while hydropower accounted for 15%. This suggests that coal is the highest energy source for BTC mining, followed by Hydropower in January 2022.
Nevertheless, BTC mining’s reliance on coal and hydropower reduced over the years. In 2020, coal-powered was 40%, while hydropower constituted 34%.
Contrary to coal, Natural gas, and nuclear energy consumption in Bitcoin mining has significantly increased in the last two years. For example, natural gas consumption increased from 13% in 2020 to 23% in 2021, whereas nuclear energy went from 4% in 2021 to 9% in 2022.
Cambridge analysts reported that Chinese miners are the reason for the instability in the BTC energy consumption mix in 2020 and 2021. Chinese government closed many hydroelectricity-powered mining firms in 2021, resulting in a drop in hydropower contribution in BTC mining.
The Shift In Mining Power To The U.S
The Cambridge study reported that the Chinese crypto mining ban caused miners to migrate to other countries, which increased BTC’s environmental footprint.
The Cambridge analysts stated that the BTC mining electricity mix varies from country to country. Some countries rely on sustainable energy, while others rely on fossil fuels. For example, sustainable energy contributes to about 98% of Sweden’s electricity generation, while Kazakhastan uses fossil fuels.
The Analyst asserted the increase in nuclear and natural gas energy usage in BTC mining is evident in the move of mining power to the U.S. Natural gas accounts for 38% of the U.S electricity. In comparison, nuclear energy accounts for 19%.
The latest update of the CBECI shows that BTC mining accounted for Greenhouse gas emissions (GHG) of 48 million tons of Carbon dioxide in 2022. This number is 14% lower than the GHG emission estimates in 2021. To the study, BTC mining only contributes about 0.1% of global GHG emissions.
Featured image from Pixabay, chart from TradingView.com