Key Takeaways

• New studies suggest Bitcoin operates as a net negative emissions network.
• Approximately 57% of all BTC miners utilize sustainable energy sources.
• Data indicates that cleaner mining initiatives have reduced Bitcoin’s carbon emissions by 7.5%.

Bitcoin’s Environmental Impact

Bitcoin (BTC) has faced criticism for its significant power usage linked to climate change. However, recent data indicates that Bitcoin now functions as a net negative emissions network. This means Bitcoin removes more carbon from the atmosphere than it emits, which benefits the environment. Greenhouse gases like carbon dioxide and methane contribute to climate change, primarily from human activities, such as burning fossil fuels.

Daniel Batten, a climate tech investor, claims Bitcoin is “the world’s most sustainably powered industry.” Around 57% of the energy used in Bitcoin mining comes from renewable sources like solar and wind, compared to just 33% in 2020-2021.

Batten, an environmentalist, noted that “the primary source of power for Bitcoin mining is hydro.” He further explained, “Bitcoin, like electric vehicles, reduces net emissions because it replaces more emission-intensive gold as a store of value and emission-intensive banking services for transactions.”

He also emphasized that the Lightning Network, which enhances transaction speed and reduces costs, allows Bitcoin to scale beyond Visa’s capabilities while maintaining a lower carbon footprint.

Energy Consumption in Bitcoin Mining

Bitcoin mining consumes significant electricity, surpassing the energy use of many countries. This process creates new coins by solving complex mathematical problems with powerful computers continuously.

According to the Cambridge University Bitcoin Electricity Consumption Index, Bitcoin consumed 121.13 terawatt-hours of electricity in 2023. This amount is sufficient to power the Netherlands, a nation of 17 million people, as reported by the International Energy Agency.

Addressing Criticisms

Critics often reference Cambridge University’s data, citing outdated datasets that exclude renewables from Bitcoin’s energy mix. A 2019 study from the University of Hawaii at Manoa estimated that Bitcoin mining could increase global temperatures above 2°C, while the UN aims to limit global temperature rise to 1.5°C.

Another report by the United Nations University in 2023 claimed that 67% of the electricity consumed for Bitcoin mining originated from fossil energy sources. Oleksandr Lutskevych, CEO of CEX.io, responded, stating that even considering this data, Bitcoin still exhibits a lower reliance on fossil fuels, which represented about 82% of global energy consumption at that time.

In 2018, Alex de Vries, a Dutch data scientist, published a widely-discussed paper arguing that Bitcoin’s carbon emissions could be evaluated per transaction. However, Batten pointed out that this metric has been disproven. He explained that Bitcoin’s energy usage does not correlate with transaction volume, stating, “Bitcoin can scale to billions of transactions without adding to its energy use or emissions.”

Batten believes the negative portrayal of Bitcoin as an ecological villain has deterred about $65 trillion of institutional capital from entering the industry. He emphasized the need to change this narrative to attract sovereign wealth funds and institutional investors focused on sustainability.

Efficiency Improvements in Bitcoin Mining

Mason Jappa, CEO of Blockware Solutions, emphasized evaluating Bitcoin’s energy usage based on the value stored in the network, rather than the transactions processed. He noted that while miners process transactions, they also enhance the network’s security, reinforcing Bitcoin’s role as a store of value.

Currently, the Bitcoin market cap is approximately $1.4 trillion, and miners play a crucial role in securing this value. Jappa acknowledged that miners consume high energy levels, but all stores of value require energy for protection.

He compared Bitcoin’s energy consumption to other sectors, noting that it remains significantly lower than traditional banking, which consumes about 4,981 TWh annually—40 times more energy than Bitcoin. The gold mining industry also surpasses Bitcoin mining, using 265 terawatt-hours of electricity in 2023.

The Bitcoin mining industry is also improving its efficiency. The Bitcoin Mining Council reported a 50% decline in the network’s emission intensity over the past four years. This reduction means that every transaction or store of value action over the Bitcoin blockchain contributes to net emission reduction.

In addition, Bitcoin’s hash rate, which represents the computational power for mining and transaction processing, has quadrupled. Lutskevych attributed this growth to increased renewable energy use and significant advancements in mining hardware efficiency.

Today’s application-specific integrated circuit (ASIC) miners have become 100% recyclable, with energy efficiency improvements ranging from 200 to 1,000 times over the last decade. However, Lutskevych reminded us that Bitcoin remains the most energy-intensive cryptocurrency, ensuring an unparalleled security level for the network.

Bitcoin’s Role in Emission Reduction

During the second Proof-of-Work Summit in Germany at the end of September, Batten highlighted Bitcoin’s evolution into an emissions-negative network, showcasing 21 climate benefits and 19 humanitarian benefits. He stated that as more miners adopt renewable energy, Bitcoin’s carbon footprint will shrink, aiding in power grid stabilization through demand response capabilities.

One of the most promising opportunities for Bitcoin mining lies in landfills, which release substantial methane (CH4) emissions. Scientists assert that methane has a warming effect 84 times greater than carbon dioxide over a 20-year period. Batten remarked that landfill gas represents Bitcoin’s “strongest lever to mitigate climate change in the next 25 years.”

He mentioned that five companies mine Bitcoin using power generated from landfill methane, while 29 entities utilize carbon-negative energy sources. Since 2021, these initiatives have resulted in a 7.5% reduction in Bitcoin emissions. Batten asserted, “No other industry has approached this level of reduction without carbon offsets.”

To achieve 100% emission mitigation, Bitcoin mining operations will need to harness gas from at least 35 landfills. The avoided methane emissions can also generate carbon credits, allowing landfill owners to profit on global carbon markets.

Batten suggested that investing in landfill power generation may offer a more viable option for miners seeking to lower operational costs. He noted that firms investing in landfills avoid 45 times more emissions per dollar than companies investing in solar farms.

An example of this approach is Grid Share, a New Zealand-based AI computing and Bitcoin mining firm. They plan to extract BTC using power generated from a landfill in South America. When fully operational, this facility will avoid 114,000 tons of carbon dioxide emissions annually, surpassing the 36,000 tons expected from the world’s largest carbon capture plant, dubbed “Mammoth” in Iceland.

Batten concluded by stating, “Bitcoin can solve some of the toughest environmental challenges of our time.”

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