A study in science journal, Nature, has revealed that China’s “electricity-hungry bitcoin mines” that power nearly 80% of the global trade in cryptocurrencies, risk undercutting the country’s climate goals. bitcoin mining
Bitcoin and other cryptocurrencies rely on “blockchain” technology, a database of transactions, with entries that must be confirmed and encrypted. The network is secured by individuals called “miners” who use high-powered computers to verify transactions, with bitcoins offered as reward. Those computers consume enormous amounts of electricity.
According to the study, coal powers about 40% of China’s bitcoin mines, while the rest use renewables. However, it warned that, the coal plants are so large they could end up undermining Beijing’s pledge to peak carbon emissions before 2030 and become carbon neutral by 2060.
The Nature study further found that if unchecked, China’s bitcoin mines will generate 130.5m metric tons of carbon emissions by 2024. This is close to the annual greenhouse gas emissions of Italy or oil-rich, Saudi Arabia.
The study also notes that Chinese companies with access to cheap electricity and hardware handled 78.89% of global bitcoin blockchain operations as of April 2020. This involves minting new coins and keeping track of cryptocurrency transactions.
Speaking to the issue, Co-author, Wang Shouyang from the Chinese Academy of Science intimated that the development threatens “emission reduction effort”.
“The intensive bitcoin blockchain operation in China can quickly grow as a threat that could potentially undermine emission reduction effort.”
“The government should focus on upgrading the power grid to ensure a stable supply from renewable sources. 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.”
Carbon taxes not enough
This year the crypto-mining industry is expected to use 0.6% of the world’s total electricity production, or more than the annual use of Norway, according to Cambridge University’s Bitcoin Electricity Consumption Index.
The price of a bitcoin surged fivefold in the past year, reaching a record high of over $61,000 in March. It is now hovering just below the $60,000 mark.
Unlike some developed countries, China has not introduced carbon taxes. The country’s carbon reduction efforts have focused largely on the rapid buildout of renewable energy infrastructure.
Speaking to this, Co-author,Wang Shouyang averred that given the profits available, imposing carbon taxes was not enough to deter miners.
China banned trading in cryptocurrencies in 2019 to prevent money laundering, but mining is permitted.
Coal-rich regions in the country are now pushing out bitcoin miners as they struggle to curb emissions. Last month, Inner Mongolia announced plans to end the “power-hungry” practice of cryptocurrency mining by the end of April. The announcement came after the region failed to meet annual energy consumption targets.
The region accounted for 8% of the computing power needed to run the global blockchain. bitcoin mining