According to a study published this week, China could ultimately exceed its targets of emission reduction due to carbon-intensive bitcoin mining.About 75% of bitcoin mining worldwide is carried out in China, where electricity is cheap and manufacturers that produce specialized equipment can access it relatively easily. Consequently, the Bitcoin carbon footprint of the country is as large as one of its ten largest cities, according to paper.
Contrary to most currencies, issued by one entity like a central bank, Bitcoin has to be “mined” based on a decentralized network.This happens when Bitcoin transactions are “verified by” miners, recorded on a public directory called the blockchain. They run computers designed to resolve complex mathematical puzzles that allow a bitcoin transaction to occur efficiently; the miners then receive bitcoin as a reward.
This computer mining uses enormous amounts of electricity, especially in large numbers.
Academics from the University of the China Academy of Science, Tsinghua University and Cornell University, Surrey, have been conducting research on Chinese mining activities – published by the peer-reviewed journal Nature Communications, on Tuesday.
It comes amid China’s claims of wanting to become more environmentally friendly. Last year, President Xi Jinping said that China aims to reach peak carbon dioxide emissions by 2030 and carbon neutrality by 2060. Bitcoin, on the other hand, threatens to derail those plans.
“Without appropriate interventions and feasible policies, the intensive bitcoin blockchain operation in China can quickly grow as a threat that could potentially undermine the emission reduction effort taken place in the country,” the authors wrote.
According to the Cambridge Bitcoin Electricity Consumption index, a project by the University of Cambridge, bitcoin mining consumes an estimated 128,84 terrawatt-hours (TWH) annually of energy worldwide, more than whole countries such as Ukraine and Argentina.
“The growing energy consumption and associated carbon emission of bitcoin mining could potentially undermine global sustainable efforts,” wrote the authors of the latest study.
“Without any policy interventions, the annual energy consumption of the bitcoin blockchain in China is expected to peak in 2024 at 296.59 Twh and generate 130.50 million metric tons of carbon emission correspondingly.”
The authors note that by 2024 China’s bitcoin power consumption will exceed Italy’s or Saudi Arabia’s total energy consumption.
During the study in a peer-reviewed journal, some people said that there was not sufficient data.
Nic Carter, Castle Island Ventures partner and co-founder of the website Coin Metrics, wrote on Twitter that the paper “leaves much to be wanted
“I expected most of the paper to be about province-level data covering energy mix of Chinese miners,” wrote Carter. “But that’s missing. Instead, they claim to have taken this into account… but don’t show their work. They just assert they’ve quantified this.”
The authors did not immediately respond to CNBC’s request for comment.
Inner Mongolia China said it plans to ban new crypto-currency mining projects last month and to shut down existing activities in an effort to reduce energy consumption.
Located in northern China, Inner Mongolia failed to achieve its central government energy use assessment objectives in 2019 and Beijing was scolded. In response, the Committee for Development and Reform laid down energy consumption plans for the region. These include, in part, the shutdown and non-approval of existing cryptocurrency mining projects by April 2021.The motivation for the intense mining of Chinese bitcoin could go beyond making money (the value of bitcoin in the last year increased from $7,000 to nearly $60,000). Peter Thiel expressed concern that Bitcoin might serve as a “Chinese financial weapon against the US,” this week. Silicon Valley billionaire.
“Even though I’m sort of a pro-crypto, pro-bitcoin maximalist person, I do wonder whether at this point bitcoin should also be thought in part of as a Chinese financial weapon against the U.S., where it threatens fiat money, but it especially threatens the U.S. dollar, and China wants to do things to weaken it, so China’s long bitcoin,” Thiel said on Tuesday at a virtual event held by the Richard Nixon Foundation.
The PayPal and Palantir co-founder has invested in bitcoin companies and previously said he was “long bitcoin” and considers it the “digital equivalent of gold.”