BTC mining across the globe

Bitcoin mining is a significant and growing sector globally, with major implications for energy use and environmental impacts. In 2020-2021, the mining network consumed 173 terawatt-hours (TWh) of electricity, a 60% increase from the 2018-2019 period. If Bitcoin were a country, its 2023 electricity consumption would rank 27th globally, surpassing countries like Pakistan. The top contributors to mining include China, the United States, Kazakhstan, Russia, and Malaysia. China’s share decreased from 73% in 2021 to 21% in 2022 due to government restrictions, leading to increased shares in the United States and Kazakhstan.

Electricity costs and government policies heavily influence mining locations. For example, Kazakhstan offers electricity prices three times lower than the US, attracting substantial investments. The regulatory landscape within the US varies by state, with Texas, Kentucky, and New York emerging as mining hotspots. Mining activity correlates strongly with Bitcoin’s price volatility, with a 77% correlation between Bitcoin’s price fluctuations and its energy consumption from 2020-2021. A 400% price rise from 2020 to 2021 led to a 140% increase in electricity consumption globally.

Mining operations have also been drawn to regions like Iceland and the Arctic Circle due to low electricity costs and cool climates. However, these operations face challenges, including cost pressures, which caused the collapse of some ventures, such as KnCminer in Sweden.

Environmental footprint of BTC mining

Bitcoin mining’s energy reliance results in significant carbon, water, and land footprints. From 2020 to 2021, mining emitted 86 million metric tonnes (Mt) of CO2, primarily from fossil fuels, which constituted 67% of its energy mix. Coal alone accounted for 45%. These emissions equate to burning 84 billion pounds of coal or the output of 190 natural gas power plants. Hydropower, though less carbon-intensive, contributed 16% of the energy mix but carried high water and land-use implications.

The water footprint of mining totalled 1.65 cubic kilometres (km³) in 2020-2021, equivalent to the domestic water use of over 300 million people in Sub-Saharan Africa. Its land footprint exceeded 1,870 square kilometres, more than 1.4 times the size of Los Angeles. Mining also generates substantial electronic waste, with hardware becoming obsolete every 1.5 years. This waste generation is equivalent to the annual electronic waste output of countries like Luxembourg.

The carbon intensity of mining is alarming, with Bitcoin emissions alone potentially pushing global warming beyond the Paris Agreement’s 2-degree Celsius threshold. To offset emissions from 2020-2021 mining, an estimated 3.9 billion trees would need to be planted.

The world’s top 10 BTC miners

China, the United States, Kazakhstan, Russia, Malaysia, Canada, and Germany dominate Bitcoin mining, accounting for 94% of the sector’s carbon footprint in 2020-2021. While Canada’s mining electricity use is 20% that of the US, its carbon emissions are only 7% due to a cleaner energy mix. Countries such as Ireland and Thailand also feature prominently in water and land-use rankings due to their reliance on water- and land-intensive energy sources, such as hydropower and bioenergy.

Iran ranks among the top contributors to Bitcoin’s water footprint despite facing severe water scarcity challenges. Its reliance on natural gas lowers water usage compared to hydropower-dependent nations like Canada and Norway but results in higher carbon emissions. Together, the top ten nations contribute 92.5% of the water footprint and 93% of the land footprint of global Bitcoin mining.

Policy recommendations

Immediate global and national regulatory action is essential to mitigate the environmental impacts of cryptocurrency mining. Suggested measures include taxing mining revenues, imposing carbon offsets, and banning non-renewable energy-based mining. Transparency in mining activities and energy use must be prioritised. Encouraging less energy-intensive blockchain validation methods, such as proof-of-stake (PoS), could significantly reduce energy consumption. To provide context, transitioning to PoS or other innovative methods could mitigate energy use while still maintaining network security.

Research into environmental impacts beyond carbon emissions and Bitcoin is necessary to guide policymakers and industry stakeholders. High-resolution data is critical to understanding the impacts of mining hardware, blockchain validation protocols, and resource use. Additionally, the integration of sustainability measures, such as replacing paper money with digital currencies, could save an estimated one billion trees globally.

Economic and environmental trade-offs must be carefully evaluated to ensure a sustainable transition to digital currencies. Policymakers, industries, and stakeholders need to act decisively to address climate change, resource scarcity, and social equity challenges arising from this rapidly growing sector.