Crypto critics have been making a lot of fuss over the years about the environmental impacts related to the mining of certain cryptocurrencies, especially that of the world’s most prominent digital currency, Bitcoin.
But new research shows that a large portion of the carbon emissions caused by Bitcoin mining has been decreasing throughout the last six months, and it seems the future of cryptocurrency is looking a lot “greener” moving forward.
A recent study from Cambridge University has shown that the Bitcoin mining industry is making huge progress toward sustainable practices and renewable energy consumption and that China’s crackdown on crypto-related services and the mining of cryptocurrency is most likely the biggest reason for the decline.
Bitcoin mining is an energy-intensive operation that until recently consumed a staggering amount of electricity, which has been said to exceed that of entire countries such as Argentina, Malaysia, and Norway.
Earlier in 2021, Bitcoin mining used over 60 times more electricity than just six years ago, so increasing regulation around cryptocurrency should come as no surprise. Whether or not China had these reasons in mind when halting crypto-related activities in the country will always remain a mystery.
Up until China’s crackdown, the country was accountable for almost 75% of the world’s Bitcoin mining operations, but since the new regulations came into force, the Bitcoin network’s hashrate (the total computing power of Bitcoin miners in the world) has dropped by over 50%.
A large portion of China’s electricity comes from the use of coal, accounting for almost 60% of the country’s total energy capacity in 2019. And now that Bitcoin mining has been forced elsewhere, carbon emissions as a result of mining activities have declined drastically.
Bitcoin now consumes around 70 terawatt-hours of energy per year, which comes to about 0.33% of the world’s entire electricity production. This is almost half of what it was in May.
Because Bitcoin miners work on lower profit margins, the only real variable cost to the operation is electricity, and cheaper energy means higher profits. Therefore, miners are now looking to countries where regulations on cryptocurrencies are at a minimum, and where electricity is cheap.
Some experts believe that Bitcoin mining should become a lot easier and possibly a lot more profitable for many mining operations outside of China, now that most Chinese miners are going offline, and the hashrate is declining.
Although some of these mining operations have set up shop in similar regions, the majority of new crypto mining operations are using renewable energy, to an extent, at least. Relocating to the United States, for example, means a greater proportion of renewable energy is being used for mining, as the US utilizes a lot more renewable energy than China, and high-efficiency equipment is more accessible.
“We’re seeing a ton of inbound requests from Chinese-based mining companies that are looking to relocate to North America and are looking to do it urgently…We’re receiving over a hundred megawatts of requests per day.” according to Dave Perrill, CEO of a cryptocurrency mining colocation company called Computer North.
He added by saying “I think in the course of the next 12 to 18 months, over 50% of the hashrate will be in North America,”
Various efforts have been made to reduce carbon emissions related to the process of mining cryptocurrency in the US. In May this year, a few top crypto miners from North America met with Tesla CEO, Elon Musk, with the intention of forming a Bitcoin Mining Council.
This came shortly after Musk’s announcement that Tesla will no longer be accepting Bitcoin as payment due to environmental concerns around the mining of said currency. But since the meeting, Musk has confirmed that Tesla will continue accepting Bitcoin once the mining rate for the industry reaches 50% renewable energy.
It seems that the mining industry is slowly moving in the right direction as the global acceptance and integration of cryptocurrency hangs in the balance. I personally believe that the environmental impact of crypto mining is the single most important obstacle that needs to be overcome before this can be achieved. After all, what’s the use of cryptos when you have no planet to spend them on!