Bitcoin’s energy footprint less than expected finds new study

The truth, according to a new study from researchers at Aalborg University in Denmark, is somewhere in the middle. By conducting a cradle-to-grave analysis of Bitcoin mining, Susanne Köhler and Massimo Pizzol claim to have arrived at a clearer picture of the total environmental impact of Bitcoin mining.

Considering all stages of the process — from the extraction of raw materials and the manufacture of mining equipment to the solving of the complex mathematical puzzles that proof-of-work demands — Köhler and Pizzol found the Bitcoin network consumed 31.3 Terawatt-hours of electricity, and generated 17.3 megatons of carbon dioxide equivalents in 2018.

These figures are lower than previous estimates that have been routinely used by environmentalists to criticize the network for consuming more electricity than many small countries.

Flawed assumptions

A study led by Christian Stoll at the Technical University of Munich (TUM) in June estimated that annual carbon dioxide emissions from the Bitcoin network were as high as 22.9 million metric tons — a similar amount of pollution to that produced by Jordan.

The new study from the University of Ahlborg suggests this conclusion could be false, as it is based on flawed assumptions about the origins of electricity used for mining Bitcoin in China.

Breaking down mining into the different regions of China shows that the contribution of miners in Inner Mongolia, which relies heavily on fossil fuels like coal to generate its electricity, has been overstated, as the area is home to only around 12 percent of Bitcoin miners.

The highest concentration of Bitcoin miners, a total of 30 percent, is thought to be operating in Sichuan, the Southwestern province of China that has a protracted rainy season which supplies plentiful cheap electricity from hydropower. Sichuan’s contribution to Bitcoin mining’s CO2 emissions is minimal but may have been conflated in previous studies with mining undertaken with electricity from fossil fuels in regions like Inner Mongolia.

Such mistakes are easy to make, as although it is easy to determine the sources of electricity used in any particular location, it is not so easy to track miners, who have no incentive to publicly report their location.

"Most miners belong to a mining pool," said Köhler to Brave New Coin. "While it is possible to figure out where the headquarters of that mining pool is located, it is more difficult to identify the locations of the individual miners. They might join the mining pool from a different country or change mining pools repeatedly."

A sustainable future for mining

As the number of transactions increases, critics suggest that Bitcoin is only likely to get hungrier, pushing electricity consumption and the associated carbon emissions through the roof.

Köhler’s study is optimistic suggesting the number of miners is likely to continue growing, but the environmental impact per miner will shrink as miners pivot towards renewable energy sources, move to colder climates, and adopt more energy-efficient mining equipment.

Speaking to Brave New Coin, Köhler suggests in the long-term, the most competitive mining operations will be "those that can benefit from hydropower or geothermal energy," and take advantage of improvements in battery technology to maintain a steady flow of power.

The other possibility, which has previously been suggested by experts like Andreas Antonopoulos, is that miners could start building their own renewable energy capacity.

In a Q&A session on bitcoin mining, Antonopoulos suggested Bitcoin can be used as a way to store surplus energy from renewable energy sources that would otherwise be wasted. In this way, Bitcoin could actually act as a subsidy to alternative energy projects around the world.

Elsewhere, other Bitcoin mining plants are already incorporating their own energy sources. In West Texas mining firm Layer1 is building a facility consisting of wind-powered Bitcoin mining rigs.

Other schemes promise to change mining on a more fundamental level. Researchers at Cornell University plan to use silicon photonics to fix the fundamental issue of computational expense and enable more energy-efficient mining.

While this has yet to be put into production, the ability of new hardware to create seismic shifts in the mining industry has already been demonstrated in 2011 with the arrival of ASICs.