Industry incentives create greener crypto mining

In the wake of a new White House report on the climate implications of energy-intensive cryptocurrency mining, research from Cornell Engineering suggests that providing green policy incentives for carbon capture and renewable energy should help such miners reduce their carbon footprint.

The Cornell study, “Mining Bitcoins with Carbon Capture and Renewable Energy for Carbon Neutrality Across States in the USA,” was published Sept. 14 in Energy & Environmental Science.

The carbon impact of cryptocurrency faces increasing energy scrutiny and was examined in a White House report, “Climate and Energy Implications of Crypto-Assets in the United States,” published on September 8 by the White House Office of Science and Technology Policy. This report is a result of President Joe Biden’s Executive Order 14067 (March 2022) – “Ensuring Responsible Development of Digital Assets”.

“Bitcoin mining’s thirst for energy and the problematic associated carbon emissions have raised concerns worldwide,” said senior author Fengqi You, the Roxanne E. and Michael J. Zak Professor of Energy Systems Engineering.

“Whether you like it or not, it’s a market. Crypto is here,” said You, a senior faculty fellow at the Cornell Atkinson Center for Sustainability. “As the cryptocurrency market grows, how can we better use science to inform energy and climate policy? How can we encourage industry to exercise environmental, social and governance management and to mine in a more sustainable way? That’s the key.”

Validating transactions with cryptoassets—performed through consensus mechanisms such as “proof of work,” used by the Bitcoin and Ethereum blockchains—requires enormous amounts of electricity. Total global electricity consumption for cryptocurrency mining is between 120 billion and 240 billion kilowatt-hours per year – a range that exceeds the total annual electricity consumption of large countries, such as Australia and Argentina, according to the White House report.

The Cornell study shows that states with a large proportion of renewable energy in the electricity grid and lower electricity prices can mitigate the environmental damage caused by cryptocurrency.

In the United States, whose federal and state policies balance economic development, strengthen environmental protection, and offer incentives for direct carbon capture from the air and environmentally friendly mining, cryptocurrency becomes more sustainable.

“Cryptocurrency mining is like mining precious metals,” he said. “The deeper underground you go, the harder it is to extract. For cryptocurrency, it takes more time to validate now than before.”

In a techno-economic environmental analysis in the paper, the Cornell group surveyed all 50 states on the feasibility of cryptocurrency mining. Among crypto-mining states, Vermont, Maine, Washington, Idaho and New Hampshire emitted the least carbon dioxide, while Delaware, West Virginia, Rhode Island and Kentucky produced the most.

Economically speaking, Hawaii, Rhode Island, Alaska, Connecticut, West Virginia and Kentucky fared the worst, while Washington was the most profitable state, followed by Vermont (with almost all green energy) and New York (which has a lot of hydropower and is working towards all-green energy ).

“The study finds that states with lower electricity prices typically have a higher penetration of renewable energy on the power grid,” you said. “If you’re mining for cryptocurrency and you choose a location that has a lower electricity price, it’s likely to use cleaner electricity to mine bitcoin.

“Greener technology is coming,” he said. “We are developing renewable energy systems to support the sustainable development of this industry, promote the economy and support climate action.”

In addition to you, the first author is Haider Niaz, a visiting researcher at the Process-Energy-Environmental Systems Engineering (PEESE) laboratory at Cornell. The National Science Foundation helped fund this research.