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62.4% of the electricity used for Bitcoin mining comes from fossil fuels, Cambridge report

62.4% of the electricity used for Bitcoin mining comes from fossil fuels, Cambridge report
Photo Credit: 123RF.com
27 Sep, 2022
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Fossil fuels accounted for 62.4% of the electricity used for mining Bitcoins as of January 2022, reveals new data released by the Cambridge Centre for Alternative Finance (CCAF) on Tuesday after it made an update to Cambridge Bitcoin Electricity Consumption Index (CBECI).  

CBECI is considered one of the most trusted sources for assessing the environmental impact of Bitcoin mining. It keeps track of the average monthly hash rate, which quantifies the amount of computational power used for processing crypto transactions in proof-of-work (PoW)-based crypto networks such as Bitcoin.  

With the new update, CBECI can provide daily estimates of the annual and total greenhouse gas emissions triggered by Bitcoin mining. 

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The new findings show that coal was the largest single energy source accounting for 36.6% of all Bitcoin mining activities. Out of the sustainable energy sources, hydropower accounted for 26.3% of the electricity used for mining, while nuclear power’s share was 11.3%. 

The findings of the Cambridge report refutes the crypto industry’s claims that the share of sustainable energy sources in Bitcoin’s electricity mix has improved. In July, Bitcoin Mining Council (BMC) said in a report that 59.5% of the electricity used for Bitcoin mining comes from sustainable sources of energy, growing 6% YoY since Q2 2021.   

CBECI data further shows that the share of sustainable sources of energy in Bitcoin’s electricity mix has deteriorated. Bitcoin’s average emission intensity in 2021 was 531.81 gCO2e/kWh, up from 491.24 gCO2e/kWh in 2020, according to the index.  

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Alexander Neumueller, Digital Assets CBECI Project Lead at CCAF attributed this deterioration to the ban on crypto mining by the Chinese government in June 2021 and the subsequent shift in mining activities to other countries.  

Neumueller pointed out that before the ban, miners took advantage of “favourable electricity rates” during the rainy season by relocating mining activities from coal and oil-powered regions to areas where hydropower was in abundant supply.  

“The seasonal relocations were crucial as those significantly altered the electricity mix,” he added.  

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 Though crypto mining has started again in China, the country’s impact on the overall electricity mix remains limited, lamented Neumueller.  

According to a May report by CCAF, China’s average monthly hash rate share went up from 0% in August 2021 to 21.11% in January 2022 due to underground mining operations.

The environmental impact of crypto mining is a major concern. Apart from China, several other countries have banned crypto mining permanently or temporarily during winter or summer seasons when power demand is higher than usual.

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