According to the recent bitcoin mining report from Coinshares, it was discovered that more than 70% of bitcoin mining operations is powered by renewable energy.
December 04, 2018 | AtoZ Markets - Nearly 78% of bitcoin mining is powered by renewable energy. This is according to findings from Coinshares. The report claims that bitcoin mining has a good impact on the future of renewable energies. This report contradicts with allegations the media often claim that bitcoin mining is dangerous to the environment. According to estimates, close to 2/3rd of world's bitcoin mining is located in China. The report therefore focuses on how much of renewable energy is used in China and other places in the world where these operations are concentrated. Renewable energy is an energy that naturally replenishes itself. It's collected from renewable sources like wind, sunlight, tides, waves and geothermal sources. These sources of energy are considered to be safe and friendly to the environment.
Is Bitcoin Mining Harmful to the Environment?
For some time, there have been many claims from the media regarding the danger bitcoin mining might be causing to the environment. There were claims that bitcoin mining expends more energy that some countries as a whole. The continuous effect of this, over a period of time, might expand global temperature by 2% as the claims had it. These claims have been addressed by the report. The report claims that though bitcoin mining is costly, it does little and insignificant harm to the environment now and perhaps in the future. The report reveals that many miners are always looking for cheaper energy sources which is aligning them to the use of renewable energy. Their yearn for cheap energy and profitability could subsidize the development of renewable energy now and in the future.
It should be noted that this report is based on estimates. Bitcoin mining operations are half-anonymous. Miners do not need to reveal their site locations or the amount of energy they consume. So, there are no accurate data that reveal exactly what amount of energy consumed by each region and the sources of energy used. While such data can be gotten from some mining firms, it will be almost impossible (as of now) to get same from every mining site in the world. However, the authors of this report are confident of the basis of their estimates and believe the it ''should offer insight into the most likely source of electricity supply for these miners by region''
Source of Bitcoin Mining Energy in China
The report estimated that 50% of a miner's total cost of operation is on electricity. Therefore it's only logical that miners have decided to locate themselves in areas where there is excess supply of electricity. This will help to maximize profitability. The report says:
“A cursory look at the combined data leads to an observation which cannot simply be explained by coincidence: the bulk of Chinese Bitcoin mining is located in provinces where either wind [or] solar curtailment is high, or where total installed hydropower capacity is large,”
The report noticed that ''the very provinces that house the majority of cryptocurrency mining operations in China are also the ones that derive sizable portions of their energy generation mix from renewables''. The report estimates that 80% of mining operations in China which is also 48% of global total is done in Sichuan province. In this province, 90% of the energy source is from renewables. This means that more than 40% of world's bitcoin mining energy consumption is from renewables.
Source of Bitcoin Mining Energy outside China
Aside China, the report also covered other places where there are bulk of bitcoin mining. Places like Washington, Oregon, New York, Quebec, British Columbia, Sweden, Norway, Iceland and Georgia were mentioned in the report.
“When surveying the combination of publicly available literature and insight from industry insiders, it is clear to us that miners are, in significant numbers, leaving China, or choosing not to reinvest within China. Instead, they are setting up operations in certain regions of Scandinavia, Russia, Canada and the United States where the combination of cheap abundant electricity, friendlier regulation, fast internet connections and, to a lesser degree, cooler climates can be attained.”
“These locations are not chosen at random,” states the report. “The key consideration driving the location decision for these miners is the presence of low-cost electricity, high-speed internet, and in the case of the Northern regions, low temperatures that reduce the need for the additional cost of cooling.”
The report confirms that most of these places except New York and Russia are heavily reliant on renewable energy sources. The report estimated bitcoin mining in these regions outside China to be 35% of world's total leaving 5% to the rest of the world.
Is Bitcoin Mining Dangerous to the Environment?
In conclusion, an estimated 95% of all bitcoin mining operations is largely powered by renewable sources of energy. This means that bitcoin mining is not as dangerous to the environment as the media has made it look. The report concluded that:
“It is, therefore, our belief that the claims around the environmental damage caused by cryptocurrency mining fundamentally miss out on the fact that many miners, in their self-serving search for the most cost-efficient form of electricity, have zoomed in on global regions with a glut of renewable electricity as prime locations for mining,”
Do you think bitcoin mining is unfriendly to the environment? Please share your thoughts with us in the comment box below.