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Amid talks around Bitcoin’s CO2 problem, CoinShares says emissions ‘insignificant’ in global context

Based on analysis of multiple estimates with respect to mining network efficiency, carbon intensity, hashrate, hardware in use, and more, Coinshares said bitcoin mining emitted 41 megatons (Mt) of carbon emissions in 2021 amounting to less than 0.08 per cent, or less than 1/1,000th, of the global total of 49,360 Mt.

bitcoin mining
Estimates of the emissions caused by minting and printing fiat currencies came in around 8 Mt per year while the gold industry was estimated to generate between 100 and 145 Mt of CO2 emissions annually, Coinshares report said. (Image: pexels)

As discussions around the environmental impact of Bitcoin mining due to the alleged high amount of energy consumption becomes a recurring subject globally, digital asset management firm CoinShares in its new report has said that carbon emission due to the bitcoin mining network in 2021 was an ‘insignificant addition’ to total emissions. Based on analysis of multiple estimates with respect to mining network efficiency, carbon intensity, hashrate, hardware in use, and more, the report titled The Bitcoin Mining Network – Energy and Carbon Impact noted that bitcoin mining emitted 41 megatons (Mt) of carbon emissions in 2021 amounting to less than 0.08 per cent, or less than 1/1,000th, of the global total of 49,360 Mt. 

CoinShares drew multiple comparisons as a frame of reference. For instance, countries with large industrial bases such as the US and China emitted 5,830 Mt and 11,580 Mt CO2e in 2016, respectively. Estimates of the emissions caused by minting and printing fiat currencies came in around 8 Mt per year while the gold industry was estimated to generate between 100 and 145 Mt of CO2 emissions annually. Moreover citing the US-based investment management firm for digital assets Galaxy Digital, Coinshares said that the global banking system’s emissions were higher at 130 Mt per year. 

The overall carbon intensity of the bitcoin mining network was still expected to keep trending down over time by taking benefit of the renewable energy generation happening in different parts of the world.

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“At a minimum, we believe emissions will fall in line with the reductions in the carbon emissions of global electricity generation in general. However, we also expect the reduction to be larger than the global average since miners are more mobile than traditional industries and can move to locations where cheap renewables are constructed, almost no matter how remote the locations may be. This allows miners to take advantage of cheap newly constructed renewable energy generation at a faster rate than other industries,” the report added. 

However, claims in the report by CoinShares were in contrast to the estimates made by institutions such as Cambridge. While according to CoinShares, the bitcoin network’s electricity consumption in December 2021 was 89 Terawatt hour (TWh), Cambridge Bitcoin Electricity Consumption Index estimated 299 TWh cumulative consumption in December 2021. Last year, Tesla’s Elon Musk had announced that it would accept Bitcoin as payment for its cars in the US due to environmental concerns. However, less than two months after the announcement on Twitter, the company had reversed the move. Last month, Mozilla, the non-profit creator of internet browser Firefox, had tweeted that it will pause crypto donations, which it started back in 2014, for “reviewing if and how our current policy on crypto donations fits with our climate goals.” 

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