According to a study published in the journal Nature on Tuesday, China’s electricity-hungry bitcoin mines, which power nearly 80% of global cryptocurrency trade, risk undermining the country’s climate goals.
Bitcoin and other cryptocurrencies are created by solving puzzles with powerful computers that consume massive amounts of energy, much of which comes from coal-fired power plants.
According to the Nature report, if left unchecked, China’s bitcoin mines would emit 130.50 million metric tons of carbon by 2024, which is comparable to Italy’s or Saudi Arabia’s annual greenhouse gas emissions.
According to the report, Chinese companies with cheap energy and hardware managed 78.89 percent of global bitcoin blockchain operations as of April 2020.
This entails the creation of new coins as well as the tracking of cryptocurrency transactions.
According to the report, about 40% of China’s bitcoin mines are powered by coal, while the rest are powered by renewable energy.
However, the coal-burning rigs are so big that they may jeopardize Beijing’s commitment to peak carbon emissions by 2030 and become carbon neutral by 2060, according to the study.
“The intensive bitcoin blockchain operation in China can quickly grow as a threat that could potentially undermine the emission reduction effort,” co-author Wang Shouyang from the Chinese Academy of Sciences told AFP
Wang believes the government should concentrate on improving the power grid to ensure a steady supply of renewable energy.
“Since energy prices in clean-energy regions of China are lower than that in coal-powered regions… miners would then have more incentives to move to regions with clean energy.”
According to Cambridge University’s Bitcoin Electricity Consumption Index, the crypto-mining industry will use 0.6 percent of the world’s overall electricity output this year, which is more than Norway’s annual use.
Bitcoin’s price has increased fivefold in the last year, peaking at over $61,000 in March and now hovering just below the $60,000 mark.
Wang believes that enforcing carbon taxes alone would not be enough to discourage miners given the income available.
To combat money laundering, China banned cryptocurrency trading in 2019, but mining is still allowed.
As they struggle to reduce pollution, coal-rich regions are evicting bitcoin miners.
Inner Mongolia declared last month that it would phase out the energy-intensive activity of cryptocurrency mining by the end of April after failing to reach annual energy consumption goals.
The area provided 8% of the computational power needed to operate the global blockchain, which is a collection of online ledgers that records bitcoin transactions.
This is more than the sum of computational power devoted to blockchain in the US.
The Nasdaq is a stock exchange that trades on the New York Stock Exchange Bitmain, which runs one of the world’s largest cryptocurrency mining pools, announced that it was moving operations from Inner Mongolia to areas with more hydropower, such as Yunnan.
SOURCE: THE GUARDIAN