Nuclear and Gas Fastest Growing Energy Sources for Bitcoin Mining: Data

by · September 27, 2022

Bitcoin’s (BTC) electricity mix has changed drastically in recent years, with nuclear power and natural gas becoming the fastest-growing energy sources powering Bitcoin mining, according to new data.

The Cambridge Center for Alternative Finance (CCAF) on Tuesday released a major update to its Bitcoin mining-dedicated data source, the Cambridge Bitcoin Electricity Consumption Index (CBECI).

According to the Cambridge data, fossil fuels such as coal and natural gas accounted for nearly two-thirds of Bitcoin’s total electricity mix as of January 2022, accounting for more than 62%. As such, the share of sustainable energy sources in the BTC energy mix was 38%.

The new study suggests that coal alone accounted for nearly 37% of Bitcoin’s total electricity consumption as of early 2022, becoming the single largest energy source for BTC mining. Among sustainable energy sources, hydropower was found to be the largest resource, with a share of around 15%.

Despite the fact that Bitcoin mining relies heavily on coal and hydropower, the shares of these energy sources in the overall BTC energy mix have declined in recent years. In 2020, coal power powered 40% of global BTC mining. Hydropower’s share is more than halved from 2020 to 2021, falling from 34% to 15%.

Bitcoin mining electricity mix from 2019 to 2022. Source: CCAF

In contrast, the role of natural gas and nuclear energy in Bitcoin mining has grown significantly over the past two years. The share of gas in the BTC electricity mix increased from approximately 13% in 2020 to 23% in 2021, while the share of nuclear increased from 4% in 2021 to almost 9% in 2022.

According to Cambridge analysts, relocation of Chinese miners was a major cause of sharp fluctuations in Bitcoin’s energy mix in 2020 and 2021. China’s crackdown on crypto in 2021 and the associated miner migration resulted in a large drop in the share of hydropower in BTC energy. mix. As previously reported, Chinese authorities shut down a number of crypto mining farms powered by hydropower in 2021.

“The Chinese government’s ban on cryptocurrency mining and the resulting shift in Bitcoin mining activity to other countries negatively impacted Bitcoin’s environmental footprint,” the study suggested.

The analysts also emphasized that the BTC electricity mix varies enormously depending on the region. Countries such as Kazakhstan are still dependent on fossil fuels, while in countries such as Sweden the share of sustainable energy sources in electricity production is around 98%.

The rise of nuclear and gas energy in Bitcoin’s electricity mix reportedly reflects “the shift of mining power toward the United States,” the analysts said. According to the US Energy Information Administration, most of the country’s electricity was generated by natural gas, which accounted for more than 38% of the country’s total electricity production. Coal and nuclear power accounted for 22% and 19% respectively.

Among other insights related to the latest CBECI update, the study also found that greenhouse gas (GHG) emissions associated with BTC mining accounted for 48 million tonnes of carbon dioxide equivalent (MTCO2e) as of September 21, 2022. That is 14% lower than the estimated greenhouse gas emissions in 2021. According to the study’s estimates, the current greenhouse gas emissions associated with Bitcoin represent approximately 0.1% of global greenhouse gas emissions.

Combining all of the previously mentioned findings, the index estimates that as of mid-September, approximately 199.6 MtCO2e can be attributed to the Bitcoin network since its inception. The analysts emphasized that approximately 92% of all emissions have occurred since 2018.

Total greenhouse emissions associated with Bitcoin as of mid-September 2022. Source: CCAF

As previously reported, CCAF has been working with CBECI as part of its multi-year research initiative known as the Cambridge Digital Assets Program (CDAP). CDAP’s institutional partners include financial institutions such as British International Investment, Dubai International Finance Centre, Accenture, EY, Fidelity, Mastercard, Visa and others.

Related: Bitcoin Could Become a Zero Emission Network: Report

The new CDAP findings differ markedly from data from the Bitcoin Mining Council (BMC), which in July estimated the share of sustainable sources in Bitcoin’s power mix at nearly 60%.

“It doesn’t include nuclear or fossil fuels, so from that you can infer that around 30-40% of the industry is powered by fossil fuels,” Bitfarm mining chief Ben Gagnon told Cointelegraph in August.

According to CBECI project manager Alexander Neumueller, CDAP’s approach differs from the Bitcoin Mining Council when it comes to estimating Bitcoin’s stream mix.

“We use information from our mining map to see where Bitcoin miners are located, and then examine the power mix of the country, state or province. As I understand it, the Bitcoin Mining Council asks its members to self-report this data in a survey,” Neumueller said . He nevertheless mentioned that there are still some nuances linked to a lack of data in the study.