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China is cracking down on Bitcoin mining, and some experts fear the cryptocurrency’s environmental footprint will become dirtier as a result.
Bitcoin is incredibly energy intensive. To create new rooms, miners rush to solve complex puzzles using specialized machines. As a result, it is estimated that Bitcoin uses as much electricity each year as the entire country of Poland. Until this year, the majority of that electricity came from a mixture of coal and hydroelectricity in China. Last week, China sounded the death knell for Bitcoin mining within its borders by making all cryptocurrency transactions and mining illegal – although most mining operations have leaked more. early in the year when bans were announced in provinces where most had already settled.
The proportion of minors still in China is now close to zero, explains Michel Rauchs, researcher affiliated with the Cambridge Center for Alternative Finance. This has big implications for Bitcoin’s carbon footprint, as emissions followed the ebb and flow of China’s dry and wet seasons. Miners have taken advantage of excess hydropower in China’s Sichuan Province during the rainy season every year, taking advantage of cheap, carbon-free energy. When that dried up, they moved north to Xinjiang Province, where coal primarily fueled their puzzle solving. Coal is the dirtiest fossil fuel, emitting more carbon dioxide when burned than oil and gas.
Now, “these two sources of Bitcoin mining have been virtually eliminated,” says Susanne Köhler, a doctoral student at Danish University of Aalborg, who published an article in 2019 on the impact of Bitcoin on the environment. Köhler and Rauchs still don’t know what this means for Bitcoin’s carbon emissions going forward. It will depend on whether miners find another plentiful source of clean energy like hydropower, switch to coal, or switch to natural gas.
But there’s a good chance Bitcoin will get dirtier and dirtier, says economist Alex de Vries, who has published research on Bitcoin’s pollution and e-waste. “Instead of using coal only part of the year, they could run on coal or natural gas all year round, and that certainly won’t have a positive impact,” he says.
Three countries are emerging as the new hot spots for Bitcoin mining, according to Cambridge’s Rauchs. “Now the United States appears to have become the biggest mining center,” he said, based on preliminary data Cambridge plans to release in the coming weeks.
As Bitcoin miners flocked to the United States earlier this year, they moved closer to coal and natural gas. The cryptocurrency has relaunched a natural gas plant in Dresden, New York, which had previously stopped producing electricity for the public Grist reports. In Pennsylvania, a Bitcoin mining company burns waste coal to power its machines.
Even if cryptocurrency operations decide to switch to more renewable energy sources to make themselves more acceptable to climate-conscious governments, they will still face stiff competition from other industries. The aluminum industry has recently sought to make greater use of Chinese hydropower in an effort to reduce emissions, competing with miners for the resource. In addition to the energy crisis, hydropower is not unlimited – recent droughts in China have reduced the country’s existing hydropower supply. A severe drought is also reducing hydroelectric power generation in the western United States.
Competition can also end up causing more pollution in the atmosphere, even in areas with clean energy sources. When utilities run out or use all available hydropower, they often turn to dirty natural gas to meet demand. The demand for energy can also make things more expensive for residents. In the United States, Bitcoin miners have flocked to places where hydropower is cheap, including East Wenatchee, Washington, and Plattsburgh, New York. Mining has swallowed up so much electricity that it has driven up utility bills for local residents.
Kazakhstan and Russia are the other two countries which attract the most minors. Kazakhstan, bordering Xinjiang, China, still depends mainly on coal for its electricity production. Hydropower accounts for around 17% of Russia’s electricity mix, which is still predominantly dominated by fossil fuels.
Earlier this year, a blog and a proof-of-concept model toured the cryptocurrency community, claiming that Bitcoin can drive the growth of renewable energy. In theory, Bitcoin could help utilities generate the capital needed to upgrade the grid so that it can handle more intermittent energy sources like solar power, according to the management company’s analysis. leading assets ARK Invest.
This argument did not win over Köhler or de Vries. “Until we see the implementation of this, I am skeptical,” says Köhler. The model is based on the assumption that mining machines only run part of the day, not 24/7 as they typically do. Köhler and de Vries do not see the point for miners to reduce their profits by limiting their operations. “Just to cover the impacts of their community, the [Bitcoin] community will need to take significant steps to introduce renewable energy. And that didn’t happen, ”says Köhler.
The other thing to keep in mind, say the experts The edge, is that the main driver of Bitcoin’s issuance is its profitability. The higher its price – it’s currently around $ 43,000 per coin – the more incentive there is to mine it. With more mining, there is more energy consumption and pollution balloons. And despite the global reshuffle around this year, Bitcoin’s energy use – and presumably its emissions – still managed to increase.
There are other cryptocurrencies that have figured out how to solve the pollution problem. Ethereum, for example, plans to remove puzzles from the process of creating new tokens, which would reduce almost all of its emissions. But as long as Bitcoin is still the biggest player – and it is not expected to move away from its current polluting model – the cryptocurrency community will continue to struggle with its huge carbon footprint.
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