In recent years, we have seen the rise of the cryptocurrency, with Bitcoin leading the way. However, we have also seen the rise in global climate changes, with more people focusing on creating a greener and cleaner world. Many countries have pledged to cut carbon emissions by 2030. However, the rise in Bitcoin in China looks as though this will derail China’s targets. As a country, it powers around 80% of the worldwide cryptocurrencies trade, but this crypto mining empire requires a lot of energy, which is a real threat to reaching the country’s climate goals.
The Bitcoin price has grown five-fold in just one year and the demand for the cryptocurrency is high. However, it relies on ‘blockchain technology’, which is simply a shared database of transactions. All entries onto this database are confirmed and then encrypted. In order to secure the network, ‘miners’ need to use incredibly high powered computers to verify all the transactions, and Bitcoins are given out as a reward. However, these high powered computers use an extortionate amount of electricity, which is where the problem lies.
Currently, it is estimated that while 60% of China’s bitcoin mines use renewable energy sources, around 40% of all bitcoin mines in China use coal. These coal mines are so vast, that it looks as though they may well end up jeopardising China’s carbon emission targets for 2030 and plans to be carbon neutral by 2060.
A Worrying Statistic
This has the potential to be very damaging to the control of carbon emissions. It is believed that if nothing is done to reign this in, China’s bitcoin mines will create around 130.5 metric tons of carbon emissions by 2024, which is on par with the yearly carbon emissions of countries such as Italy and Saudi Arabia. Just shy of 79% of global bitcoin blockchain operations were handled by Chinese companies using cheap electricity and hardware.
The threat is real. Blockchain operation in China is a huge operation and this is worrying for the future of the world as we know it.
A Change is Needed
It has become increasingly apparent that China needs to focus now on shifting the power grid to renewable sources. There are a number of clean energy areas in the country where energy prices are cheaper than in coal-powered areas. This would provide the perfect incentive for miners to shift their operations to cleaner regions using cleaner energy sources.
As it stands, this year it is predicted that the mining of cryptocurrencies will use up about 0.6% of the global electricity production – which is more than entire countries such as Norway.
However, there are a number of coal-rich regions that are looking to curb the number of bitcoin miners in order to control emissions, with Inner Mongolia shifting operations to regions with more hydropower such as Yunnan.
Bitcoin mining can still grow without too much damage, but countries such as China need to do their bit to move operations to renewable cleaner energy, so both cryptocurrencies and the world can continue to thrive.