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AsianScientist (Apr. 8, 2021) – By 2024, Bitcoin mining operations in China are estimated to generate around 130 million metric tons of carbon emissions—exceeding the annual emissions of countries like Spain, Italy or the Czech Republic. These findings were published in Nature Communications.
In early April 2021, the value of the cryptocurrency market topped US$2 trillion for the first time ever—driven largely by a rally in Bitcoin, which accounts for over 50 percent of the entire cryptocurrency market. Such digital currencies are booming especially in China, with more than 75 percent of the world’s Bitcoin mining operations taking place in the country.
Because Bitcoin mining—the process of creating new Bitcoin by solving complex algorithms—has grown increasingly energy-intensive over the years, China’s mining sector has also seen carbon emissions accelerate rapidly.
Without more stringent regulations and policy changes, the researchers warned, the sector is set to hit peak energy consumption in 2024 at a whopping 297 terawatt-hours. That would generate roughly 130 million metric tons of carbon emissions, derailing sustainability efforts worldwide.
In coming up with their estimate, the team led by Professor Dabo Guan at Tsinghua University and Professor Shouyang Wang at the Chinese Academy of Sciences created a system dynamics model for mapping emissions from Bitcoin operations, establishing the boundaries, flows and feedback loops for three interacting subsystems: Bitcoin blockchain mining and transaction, energy consumption and carbon emission.
According to their simulations, energy consumed and carbon emissions generated will continue to grow as long as Bitcoin mining remains profitable in China.
“This is mainly due to the positive feedback loop of the proof-of-work competitive mechanism, which requires advanced and high energy-consuming mining hardware for Bitcoin miners in order to increase the probability of earning block rewards,” the researchers wrote.
However, there is hope: policy interventions can reduce the negative environmental impacts, the study found.
Feeding different scenarios into their model, the researchers surmised that current policies like carbon taxation are ineffective at curbing emissions from Bitcoin operations. Instead, authorities should implement site regulation policies, such as shifting Bitcoin miners in coal-based areas to hydro-rich ones to take advantage of relatively lower energy costs during the rainy season.
Unfortunately, even under the best of policy interventions, the carbon emission intensity of the Bitcoin blockchain sector would far exceed averages in other local industries.
“It is rather surprising to arrive at the conclusion that the newly introduced cryptocurrency based on disruptive blockchain technology is expected to become an energy and carbon-intensive industry in the near future,” concluded the researchers.
The article can be found at: Jiang et al. (2021) Policy assessments for the carbon emission flows and sustainability of Bitcoin blockchain operation in China.
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Source: Chinese Academy of Sciences; Illustration: Oi Keat Lam.
Disclaimer: This article does not necessarily reflect the views of AsianScientist or its staff.
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