The Cambridge Centre for Alternative Finance says 37.6% of the energy used by the Bitcoin blockchain comes from sustainable sources — significantly less.
Bitcoin mining is a lot less environmentally friendly than industry data suggests, according to a new report.
That's substantially lower than recent estimates from the Bitcoin Mining Council, which represents some of the biggest players in the industry.
In July 2022, it had claimed 59.5% of the electricity used by miners came from sustainable sources — and argued this was a year-on-year improvement.
But the CCAF's findings also undermine claims that Bitcoin's carbon footprint is comparable to some of the world's biggest economies.
Based on its estimates, Bitcoin is responsible for 0.1% of global greenhouse gas emissions — meaning it's more comparable to the likes of Nepal and the Central African Republic.
Alexander Neumueller, who leads the Cambridge Bitcoin Electricity Consumption Index, noted how divisive BTC's energy use has become, writing:
"For some, Bitcoin is a calamity that will undo decades of environmental progress and could push global warming above 2C. Proponents counter that Bitcoin could actually help combat climate change and provide a variety of other benefits. Observing the arguments of both sides, some claims seem rather far-fetched and based on oversimplifications, while others are based on scant information."
Neumeller went on to warn that there are "significant environmental, financial and social interests at stake" — meaning interest groups on both sides are trying to influence policymakers to enact regulations that benefit them.
"This creates a landscape in which important policy and investment decisions may be influenced by biased opinion and cherry-picked data points. Therefore, it is more important than ever to realize that the issue of Bitcoin’s environmental footprint is more nuanced and complex than a quick glance might suggest."
Delving into the Data
The latest estimates suggest that the Bitcoin network has been responsible for the equivalent of 200 million tonnes of carbon dioxide since it launched — and 92% of that is since 2018.
But interestingly, total greenhouse gas emissions for this year are projected to be 14% lower than in 2021 — and this can be linked to a "substantial decrease in mining profitability."
Electricity consumption has declined as hashrate remains constant, with miners shifting to more efficient hardware and retiring older equipment — at least temporarily.
Breaking down the energy sources used by Bitcoin miners, the CCAF says fossil fuels account for 62.4% of the total electricity mix — and coal is the largest single energy source.
The largest sustainable energy source out there is hydropower, accounting for 14.9% of the total electricity that's used by miners.
Interestingly, the report goes on to claim that China's clampdown on Bitcoin mining actually negatively impacted Bitcoin's environmental footprint because hydropower was used less.
There can also be wild fluctuations in sustainability from country to country, with the Cambridge Centre for Alternative Finance adding:
"While in countries like Sweden the share of sustainable energy sources in electricity generation is about 98%, countries like Kazakhstan still rely heavily on fossil fuels, and sustainable energy sources only account for less than 11% of the electricity mix."
Researchers said they expect more data concerning Bitcoin's energy usage will become available over time, meaning "greater granularity" will be achieved over time.
And striking an upbeat note, they wrote that "interesting concepts and developments" are already emerging in the industry — including waste heat recovery and flare gas — with some positioning Bitcoin "as a catalyst for renewable infrastructure projects."
"Time will tell if these are merely novel ideas that fail to deliver on their promise, or if they will become a more integral part of the Bitcoin mining industry in the future."