A new study estimates that the energy-hungry process of bitcoin mining in China could soon generate 130.50 million metric tons of carbon emission each year – that’s more than the annual output of the Czech Republic in 2016.
As reported in the journal Nature Communications today, researchers from the University of Chinese Academy of Sciences predicted that the annual energy consumption of the Bitcoin blockchain in China will peak in 2024. At this point, bitcoin mining will require around 297 terawatt-hours of energy and will pump out around 130.50 million metric tons of carbon emissions annually. This emission output beats the total greenhouse gas emission output of whole medium-sized countries, including the Czech Republic or Qatar.
To wind back a little, bitcoin is a cryptocurrency that allows peer-to-peer transfers without the need of a centralized authority, such as a bank. The transactions are mediated and recorded on a digital ledger, known as the blockchain, shared by everyone participating in the system. Bitcoin mining is the process of verifying bitcoin transactions in the network and recording them in the public blockchain. To do this, a computer must solve complex math problems. As a reward for contributing their computing resources to the network, the “miner” is given freshly minted bitcoin.
These mathematical problems become increasingly harder to solve, making it increasingly more difficult to earn fresh bitcoins through mining. Early adopters of the cryptocurrency used to generate bitcoin on their home computer, but it now requires a mind-boggling amount of computational power and whole warehouses' worth of computers. This requires a colossal amount of electricity to power, while even more electricity is also used to cool down the furiously working computers.
China accounts for more than 75 percent of bitcoin mining operations around the world, as per the new study. Parts of rural northern China make the ideal location to run an industrial-sized bitcoin mine thanks to the cheap land, as well as easy access to manufacturers of specialized hardware.
In this new study, the researchers argue that the energy consumption of bitcoin could undermine global sustainability efforts unless stringent regulations and policy changes are introduced promptly.
As part of the research, they used modeling to see how different policy changes might shift bitcoin’s energy consumption. They found that current policies like carbon taxation are pretty ineffective at curbing emissions from the Bitcoin industry. The way forward, the study argues, is individual site regulation policies. For example, authorities could introduce strict regulation on the bitcoin industry in the coal-based energy regions, persuading miners to relocate to the hydro-rich area to take advantage of the lower cost of surplus energy availability in the area.
The researchers conceded that their predictions are not foolproof, since they didn't consider potential changes of the Chinese energy sector or any "unforeseeable uncertainties... that could cause the reality to deviate from the prediction."
Equally, the climate concerns of cryptocurrency are not agreed upon by everyone, with some arguing that there's increasing use of renewable energy within bitcoin networks and this is, in fact, pushing a clean energy revolution. The environmental credentials of bitcoin are an intensely debated subject, often driven by ideology and politics – and it looks like the discussion is set to reach boiling point in the next few years, as this new study clearly highlights.