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Bitcoin mining, a cornerstone of the cryptocurrency's decentralized infrastructure, has long been recognized for its significant energy consumption. As of March 25th, 2023, miners are drawing an impressive power demand equivalent to 15.4 gigawatts GW. The essence of Bitcoin mining lies in miners competing to validate transactions and create new blocks on the blockchn network by solving complex computational puzzles with specialized hardware that inevitably consumes large amounts of electricity.
A nuanced debate surrounds the environmental impact of Bitcoin mining. Critics often label it as a major cause for concern, highlighting its substantial carbon footprint, while proponents view it through the lens of potential climate benefits, such as grid balancing services, stimulation of renewable energy growth, methane emissions reductions through flare gas utilization and orphaned well sealing, and even the utilization of waste heat from mining hardware.
An empirical case study during the severe winter storm Elliott in North America serves as a tangible example. It was observed that Bitcoin miners curtled up to an impressive rate equivalent to 100 Exahashes per second EHs, accounting for approximately 38 of the total network's hashrate on December 22nd, 2022. This figure underscores the presence and scale of mining operations across North America, particularly in the United States.
To gn a comprehensive view of Bitcoin mining activities in the U.S., we focused our analysis on thirteen publicly traded companies that collectively accounted for about one-fourth of the global network hashrate as of December 2022. Our findings revealed a carbon intensity equivalent to the average U.S. grid emission factor, estimated at nearly 387 gCO2kWh.
The aggregated annual emissions from these thirteen miners amounted to an astounding total of 7.2 MtCO2a figure that stands out as significantly larger than the carbon footprint of the entire state of Vermont.
Notably, based on grid average emission factors alone, our study does not align with industry clms suggesting that over half 58.9 of Bitcoin mining is fueled by renewable sources or nuclear power, given the U.S.'s lower share of non-fossil energy generation from renewables 21.5 and nuclear 18.2.
While acknowledging the potentially high carbon footprint of Bitcoin mining operations in the U.S., our analysis also highlights the potential for climate co-benefits, such as financial incentives for activities like the sealing of orphaned wells to reduce methane emissions at a significant scale.
The increasing transparency surrounding the locations and energy sources of large publicly listed Bitcoin miners underscores the significance of disclosure obligations. This not only helps in exposing unsupported industry clms but also ds academicthat rely on assumptions, guiding regulators to identify areas where Bitcoin mining might offer environmental benefits.
To foster a more sustnable future for cryptocurrency and blockchn technologies, there is an imperative need to empower stakeholders through data-driven insights. MIT CEEPR's commitment lies in providing such knowledge, striving to support the development of policies that not only address but also mitigate environmental impacts while promoting technological innovation.
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