When China began cracking down on cryptocurrency transactions and mining last year, there was some hope amongst experts that crypto-mining would become greener as a result. Unfortunately, a new peer-reviewed study published in the journal Joule has revealed that use of renewable resources to power these energy-sucking crypto-mining rigs dropped by nearly 20% year-over-year.
"There was a lot of optimism that China banning Bitcoin mining would make mining more green," Alex de Vries, co-author of the study, said. "But the fact is, it was already a dirty business and it just got worse."
According to the study, in August of 2020, 42% of crypto-mining was fueled by green energy. By August of last year, that number had dropped to just 25%. The study states that the CO2 emissions put off by cryptomining alone is equivalent to emissions produced by the entire country of Greece. That's 65 megatons of carbon dioxide being released into the atmosphere every year.
Experts theorize that the drop in green crypto-mining is related to China's ban on the practice. Miners who had been relying on renewable energy from China migrated to other countries, mainly the U.S. and Kazakhstan. In both of these countries, miners now rely on fossil fuels like coal and natural gas to power their rigs.
The study directly refutes claims and studies from other groups, including a report from the Bitcoin Mining Council (BMC), a body established following public outcry about the pollution produced by cryptomining. The BMC stated that green energy is becoming increasingly popular for crypto-mining.
"Estimated sustainable energy mix was 58.5 per cent," MicroStrategy CEO michael Saylor said of the BMC report. "We saw the trend continue with dramatic improvements to bitcoin mining energy efficiency and sustainability due to advances in semiconductor technology, the rapid expansion of North American mining, the Chin exodus, and worldwide rotation towards sustainable energy and modern mining techniques."
Another report from the Cambridge Centre for Alternative Finance estimated that 40% of the energy used for crypto-mining came from renewable sources. Another source, Coinshares, claimed that the number is closer to 73%.
The wide variation comes from the difficulty in pinpointing what energy is going towards cryptomining. For instance, miners may use virtual private networks (VPN) to conduct mining operations in countries with bans on the practice. Much of the data gathered comes from major "mining pools", groups that combine computational resources, which only represent 44% of all mining activity.
The amount of fossil fuels that it takes to mine for coins is also constantly in flux. First, due to the nature of the industry, the more miners there are, the more energy it takes to mine each coin. Second, the amount of renewable energy used varies widely by region, meaning mining in some areas is greener than in others. Location data was also spotty for these studies, making analysis even more difficult.
There are some popular ideas being proposed as solutions to crypto-mining pollution, including by funneling excess renewable energy into mining but shutting down if energy becomes scarce.
However, experts say that the ban on mining in China, where renewable energy is more plentiful, shows that cryptomining is becoming less climate friendly rather than more carbon neutral.