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Bitcoin fever could upset China's climate target - E24

Bitcoin fever could upset China’s climate target – E24

A study shows that Bitcoin mining in China drives nearly 80 percent of the world’s cryptocurrency circulation, but requires massive amounts of electricity, which could upend the country’s climate goals.

Mining cryptocurrencies like Bitcoin requires large amounts of electricity and could make it difficult for China to meet its climate targets, according to a study in Nature.

Gorm Kallestad / NTB

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Bitcoin and other cryptocurrencies are extracted by powerful computers that need a lot of energy. In China, a large portion of this energy comes from coal-fired power plants.

A study in Nature shows that without restrictions, bitcoin mines in China will emit just over 130 million tons of carbon by 2021. They’re roughly as large as climate emissions as Italy or the whole of Saudi Arabia.

Great player

According to the study, Chinese companies, which have access to cheap computers and affordable electricity, in April of last year accounted for 78.89 percent of global operations in the blockchain technology that underpins Bitcoin. It includes extracting new cryptocurrencies and processing payments and transfers.

About 40 percent of Bitcoin mines are powered by electricity from coal-fired power plants, while the remainder is dependent on renewable energy. Coal-powered plants are so large that they can stand in the way of authorities’ promise that peak emissions will come by 2030, while the country will be carbon neutral after 30 years.

“The massive blockchain operation in China could quickly become a threat that could undermine efforts to cut emissions,” said Wang Shuyang of the Chinese Academy of Sciences, one of the study’s authors. He believes that the authorities should focus on improving the electricity grid to ensure a safe supply of energy from renewable sources.

Since electricity is cheaper in those regions of China with clean energy compared to regions of coal energy, the cryptocurrency winner will have incentives to move to regions with clean energy, he explains.

As much electricity as Norway

It is estimated that cryptocurrency redemption accounts for 0.6 percent of global electricity consumption this year. This is more than all the electricity used in Norway, according to the University of Cambridge.

Bitcoin has increased five times in the past year. In March, a record price of $ 61,000 was set for 1 Bitcoin. The price has decreased a bit since then.

The high profit potential means that Wang believes that the carbon tax is not sufficient to prevent those who wish to extract the cryptocurrency. To combat money laundering, cryptocurrency trading was banned in China in 2019, but recovery is still allowed.

From coal to water

Areas with a lot of coal energy are pushing cryptocurrency mines away as they fight to control emissions. Inner Mongolia will shut down all recovery by the end of April.

The region, which is not hitting the target for energy consumption, accounts for 8 percent of the computing power needed to run the global blockchain that tracks payments with Bitcoin. There is more computing power on the blockchain than the entire United States uses.

Bitmain, a New York-listed company that extracts Bitcoin, says it is moving its business from Inner Mongolia to regions with a lot of hydroelectric power, including Yunnan Province.

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