Bitcoin uses more energy per year than many entire countries. Nestled between the Netherlands (110.68 Terawatt hours per year) and the United Arab Emirates (119.45 Terawatt hours per year), Bitcoin miners are collectively eating up a whopping 112.57 Terawatt hours annually, compromising an incredible 0.52% of the entire world’s consumption. This is according to the University of Cambridge, which has created a special online tool dedicated solely to the purpose of tracking the still-skyrocketing consumption of the resource-ravenous cryptocurrency.
While a good chunk of Bitcoin’s energy — an estimated 39% — comes from renewable energy sources, most notably hydropower, the cryptocurrency’s carbon footprint is massive and rapidly expanding. In fact, Bitcoin’s overall carbon dioxide emissions have ballooned to 60 million tons (the equivalent of the exhaust produced by approximately 9 million cars). A huge amount of Bitcoin mining — about 75% of the global total — is taking place in China, where emissions-intensive coal still makes up the majority of the nation’s energy mix. This number has tripled in just two years as Bitcoin mining has become more widely adopted around the world at a breakneck pace, according to a damning March report by Bank of America analysts entitled “Bitcoin’s dirty little secrets.”
“The main argument for Bitcoin is not diversification, stable returns, or inflation protection, but sheer price appreciation,” the report read before going on to indict the company for boasting an energy footprint similar in size to that of Greece, a nation of over 10 million people. Indeed, Bitcoin has many vocal and high-profile skeptics, including Bill Gates, who has dismissed the cryptocurrency as being incompatible with the high-stakes global fight against climate change. "Bitcoin uses more electricity per transaction than any other method known to mankind,” Gates was quoted by the New York Times last month in a candid takedown of the crypto-asset.
Despite these prominent critiques, Bitcoin’s popularity has continued to go gangbusters, albeit with some bumps along the road. And while Bitcoin has a long way to go toward improving its sustainability, myriad negative externalities, and overall environmental impact, Bitcoin miners are getting innovative about finding new, cheap, and low-impact ways to power their mining operations.
In the United States, for example, Bitcoin mining rigs have been popping up on oil patches around the country to syphon off natural gas from active oil wells. Many oil drilling rigs have no pipeline connection to transport the natural gas that is a byproduct of the oil-drilling process, in which case the gas is simply burned off, or flared, going to waste while also creating greenhouse gas emissions. Bitcoin miners have been capitalizing on this opportunity by taking the natural gas that would otherwise be wasted and using it to power their mobile mining rigs.
These mining rigs are comprised of truck-pulled trailers that are fully outfitted with pipes, generators, and computers to convert this foraged natural gas to energy on the spot. This energy is then used to carry out the complex “proof-of-work” computations of which the blockchain is composed in order to earn fractions of Bitcoins. “Placed in mobile trailers, these supercomputers run as hot as 160 degrees Fahrenheit (71 degrees Celsius), and in the cold of western North Dakota, people stay warm just by sitting near them,” a recent Reuters report recounted.
This phenomenon, which is currently spreading across the cast expanses of the Rocky Mountains and the great plains, is not the first instance of this kind of symbiotic oilfield-crypto relationship. In Russia, a state-run crypto-mining company has already been mining Bitcoin at oil outfits in Siberia since late last year. Gazpromneft, a subsidiary of Russia’s state-owned natural gas giant Gazprom, the 10th biggest oil producer in the world, has been using this tactic to break into the crypto market currently dominated by China and doing so using virtually free energy, as the natural gas powering the venture would have otherwise been wasted and burned off.
While these particular instances bode well for Bitcoin’s ecological footprint by the positive double-whammy of using energy more efficiently and reducing the carbon footprint at oil drilling sites by diverting natural gas that otherwise would have been wastefully burned off, Bitcoin has a long way to go toward reducing its overall environmental impact. These mining outfits are far from the norm, and big Bitcoin operations still have a lot to answer for.
By Haley Zaremba for Oilprice.com
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