Issued on: 06/04/2021 – 17:00
China’s power-hungry Bitcoin mines, which drive nearly 80 percent of the world’s cryptocurrency trade, run the risk of undercutting the country’s climate goals, according to a study in Nature magazine on Tuesday.
Bitcoin and other cryptocurrencies are minted by solving puzzles with powerful computers that use enormous amounts of electricity – much of it is produced by coal-fired power plants.
The nature study found that, unchecked, China’s Bitcoin mines will cause 130.50 million tons of carbon emissions by 2024 – close to the annual greenhouse gas emissions from Italy or oil-rich Saudi Arabia.
Chinese companies with access to cheap electricity and hardware handled 78.89 percent of the world’s Bitcoin blockchain operations in April 2020, the study said.
This includes minting new coins and tracking cryptocurrency transactions.
Around 40 percent of China’s Bitcoin mines run on coal, while the rest use renewable energies, the study says.
But the coal-eating rigs are so big they could undermine Beijing’s promise to increase CO2 emissions by 2030 and become carbon neutral by 2060, she warned.
“The intense bitcoin blockchain operations in China can quickly become a threat that could potentially undermine emissions reduction efforts,” Chinese Academy of Sciences co-author Wang Shouyang told AFP.
The government should focus on expanding the power grid to ensure a stable supply from renewable sources, Wang said.
“Since energy prices are lower in China’s clean energy regions than in coal-fired regions … miners would then have more incentives to move to clean energy regions.”
This year, according to the Cambridge University’s Bitcoin Electricity Consumption Index, the crypto mining industry is expected to consume 0.6 percent of global electricity generation, or more than Norway’s annual usage.
The price of a Bitcoin has increased fivefold in the past year, reaching a record high of over $ 61,000 in March. Now it’s just below the $ 60,000 mark.
Given the profits available, Wang said the introduction of carbon taxes was not enough to deter miners.
China banned cryptocurrency trading in 2019 to prevent money laundering, but mining is allowed.
Coal-rich regions are now crowding out Bitcoin miners as they struggle to contain emissions.
Last month, Inner Mongolia announced plans to end the power-hungry practice of cryptocurrency mining by the end of April after the region failed to meet annual energy consumption targets.
The region accounted for eight percent of the computing power needed to run the global blockchain – a series of online ledgers used to record Bitcoin transactions.
That is more than the computing power that is used for blockchain in the USA.
Nasdaq-listed Bitmain, which operates one of the largest cryptocurrency mining pools in the world, announced that operations in Inner Mongolia will be shifted to areas with more hydropower like Yunnan.
© 2021 AFP