Bitcoin, the world’s most valuable cryptocurrency, is going green, and climate activists have noted how quickly the network has reduced its carbon emissions over the past three years. Still, it remains to be seen how this could affect BTC prices and attract tech companies like electric car maker Tesla.
Carbon emissions associated with bitcoin miners are falling rapidly
As of the end of May: on-chain data from Woonomic divided by Daniel Batten, a climate technology investor and activist, found that the amount of carbon emissions associated with bitcoin mining fell by almost 50% in three short years, from 601 g/kWh to 299 g/kWh.
It should be noted that the bitcoin hash rate and prices have steadily increased during this period. In the last quarter of 2021, bitcoin price surged as high as $69,000 before collapsing below $16,000 in November 2022. Although prices have since recovered, surging as high as $31,000 in April 2023, the hash rate has steadily increased over the years.
Bitcoin price on June 2| Source: BTCUSDT on Binance, TradingView
In proof-of-work networks like Bitcoin and Litecoin, the hash rate propagates the computing power allocated to the network in real time. It is a variable that makes the network secure and robust against third-party attacks and can also be used to measure the speed at which the Bitcoin platform consumes energy.
Miners channel computing power as a “hash rate” to secure the Bitcoin network. You need this to verify transactions in exchange for network rewards. The higher the hash rate, the higher the chance of earning a block and thus 6.25 BTC every 10 minutes.
However, fierce competition for block rewards is partially blamed for environmental degradation and miner carbon emissions. To remain competitive, bitcoin miners need to run energy-intensive equipment. Critics have always claimed that the electricity powering them comes from coal and other non-renewable sources.
As of June 2, the Bitcoin Energy Consumption Index shows that 105.23 TWh powers Bitcoin. This is the same amount of electricity that Kazakhstan uses. The resulting CO2 emissions, they add, amount to 58.69 million tons of CO2, comparable to Libya’s emissions.
However, data from the Bitcoin Mining Counsel, a group made up of some of the world’s largest BTC miners, offers more insight into the cryptocurrency’s energy consumption after they conducted a study of its members:
(…) The members of the BMC (Bitcoin Mining Council) and participants in the survey currently use electricity with a sustainable electricity mix of 63.8%. Based on this data, the sustainable power mix of the global bitcoin mining industry has improved marginally to 58.9% and remains one of the most sustainable industries globally.
Will Green Mining Support BTC Prices?
In that sense, Woonomic’s data agrees that emissions have fallen drastically over the past three years. It has almost halved to 299 g/kWh, suggesting miners have switched to greener energy sources to power their rigs.
As carbon emissions fall, tech companies would likely consider adopting BTC as a means of payment. Earlier, Tesla reversed its decision to accept BTC as payment, citing the environmental impact of Bitcoin mining. As carbon emissions fall, this could have a positive impact on BTC as major corporations around the world will embrace the coin and network.
Featured image by Canva, chart by TradingView
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