Mining and ecology ⋆ Crypto new media

Hello Redditors,

we recently published an article on []( on one of the most controversial topics now 🙂 Mining and ecology, showing that Bitcoin could become an eco-friendly alternative to banks. Pasting it here.

***Does crypto mining harm the planet ? The only way to know is to analyze the energy source it uses – dirty or green – and compare the crypto to its traditional alternative. In case of Bitcoin a significant part of the energy mix comes from renewables and, what’s most important, this part could potentially reach 100% – for mining farms could be built anywhere. Banks head offices, on the other side, are obliged to stay in city centers and take whatever energy comes from the city grids.***

It is true that mining necessitates great amounts of electricity. This is in part what makes [PoW-based]( cryptocurrencies, such as Bitcoin, so robust : electricity and hardware are the price to pay for a secure network, resistant to attacks and malicious actors.

Of course this raises ecological concerns. Is it really sustainable to spend (someone would even say waste) such huge amounts of electricity to mine coins?

Well, **electricity consumption as such does not harm the planet**. What does harm it is obtaining electricity from “dirty” sources: coal, oil etc. So when analyzing crypto mining’s impact on the environment the first question must be  “Where does this electricity come from ?”, followed by “What does this crypto aims at achieving?”. If a blockchain is set to replace an existing activity, it would be judicious to compare their carbon footprints to each other.

## Where does mining electricity come from? 

The world’s cheapest energy can be found near renewable sources, such as dams or wind farms. However, electricity is remarkably hard to stock and to transport, so unused energy in these places is most often simply lost. Luckily mining farms, unlike banks’ head offices, do not need to be located in city centers, so they can very well be set near a dam, enjoying cheap and green energy.

And that’s what mining farms actually do. A lion’s share of mining farms are using **hydro-power** and **wind energy** in Southwestern China (Sichuan and Yunnan), Scandinavia, The Caucasus, The Pacific NorthWest and Eastern Canada. The farms are also built in Iceland, a country that enjoys abundant **geothermal energy**, and beyond the Arctic Circle in the Russian Norilsk, where the temperatures as low as -40° C naturally cool down the equipment.

Different studies indicate different share of renewables in miners’ energy mix: 74% in CoinShares [report ]( 2019 vs 39% in Cambridge University [report ]( 2020. The confusion might come from Chinese miners, representing more than half of the world’s hashpower, some of whom used to migrate from the cheap hydro-power in Sichuan and Yunnan during the wet season to the cheap **coal power** in Xinjiang and Inner Mongolia during the dry season. This will not continue any longer, though. In the beginning of 2021 Inner Mongolia decided to ban cryptocurrency mining in an effort to curb its carbon emissions, which led to mining farms fleeing the region. Overall this is a good piece of news, meaning that mining in 2021 will be much greener.

There are also situations where crypto mining can be beneficial to the environment, for example in the case of **stranded gas** – a byproduct of oil extraction that is quite expensive to capture and transfer, so it is often simply rejected into the atmosphere. Mining farms are being built near oil-extraction plants (some examples include Texas and North Dakota) to utilize the stranded gas to mine coins, instead of polluting the air.

For the moment global crypto mining is not carbon-neutral, but many efforts are made to make it so, with green mining companies like Iris Energy, Gryphon or MintGreen raising record fundings to develop their activity. The latter is set to not only mine green, but also to increase the **energy efficiency** : projects of recycling heat waste from mining into hot water and heating services are being developed, with pilot programs including a whiskey distillery and a sea salt facility in Canada. 

## What does mining help achieve?

The blockchain is a decentralized alternative to traditional organizations, and its carbon footprint should be considered as an alternative to the carbon footprint of a system it is to replace. 

In the case of Bitcoin, for example, it is fiat money fiduciary money with no intrinsic value, dependent on the government and the central bank (like dollars or euros). 

Cambridge University has set up a [Bitcoin Electricity Consumption Index]( that estimates Bitcoin network power almost in real time. The current electricity consumption (as of April 2021) is around 14 GW, which is estimated at 141 TWh of annualised consumption. [Digiconomist](, another source following Bitcoin energy consumption, estimates it at 99 TWh at the time of writing.

There are much less studies on the **ecological impact of the banking industry** (like many others we just take for granted), but it is possible to make some estimations. A 2018 [study ]( Zodhya, a company specialising in reducing offices’ energy consumption, indicates that the banking system, according to only 3 metrics (branches, servers and ATMs) consumes over 140 TWh yearly. Bank offices, servers and the majority of ATMs are situated in cities and have no choice but to take their energy from the city grids, which unfortunately don’t have much renewables in their mix, thus making much of banking electricity dirty. It is also clear that the real carbon footprint of the whole banking industry is much higher when taking into account all its aspects (directors’ private jets, cash transportation… etc).

So, 99 to 141 TWh consumed by Bitcoin with 39-74% of renewable energy vs >140TWh consumed by banks, with mostly dirty energy. All things considered, it might be somewhat presumptuous to declare Bitcoin the enemy of the planet even with those figures, and it will be even more so in the years to come, considering a strong green mining trend.

As improbable as it may sound, **Bitcoin could be an environmentally-friendly alternative to fiat money**. Financing green miners and developing new ways of making electricity consumption more efficient, i.e. to use the heat waste, are key steps to make Bitcoin carbon-neutral.  Moreover, the efforts that miners deploy to find more green solutions could benefit other sectors as well.


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