Conventional financial institutions and industries might be looking to reduce their carbon footprint, but cryptocurrency miners are now following suit, with as much as half of bitcoin now estimated to be powered by renewable energy sources.
Cryptocurrencies are mined by computers that process complex algorithms — operations that require huge amounts of power.
As the market has expanded, bitcoin mining now uses more than 60 times more electricity than just six years ago and carbon emissions from the process could face increasing regulation, Citigroup said in a recent report.
The amount of electricity needed to mine bitcoin is so great that nations are cracking down, claiming that such power demand could even exacerbate climate change.
Also, the theft of conventional electricity is increasingly common in 'mining' nations such as the UK, especially since the price of bitcoin rocketed earlier this year.
Earlier this month, police in Malaysia seized and destroyed more than 1000 bitcoin mining rigs by crushing them with a steamroller — after the miners had allegedly siphoned off almost $2 million-worth of electricity to power the energy-intensive machines.
China has clamped down too, forcing some bitcoin miners to look overseas to continue their operations.
Even with such measures, emissions from cryptocurrency mining in China are not expected to peak until 2024, when they will release as much carbon dioxide into the atmosphere as an average-sized European country, according to a study published in Nature Communications.
Whether simply hoping to be hassled less by host governments or driven by a genuine desire to be greener, something is changing. Most estimates find 20% to 50% of bitcoin today is powered by renewable energy, finds Jesse Morris, chief executive of non-profit organisation Energy Web.
Iceland and Scandinavian nations are at the forefront of green-bitcoin mining, with one report hailing Iceland as a trailblazer with 8% of all bitcoins having been mined in the nation where hydroelectric and geothermal account for almost all of the power generation.
However, if miners were to start the routinely stealing renewables-fuelled power too, that would be an issue even if the environment were benefitting.
The price of Bitcoin surged back above US$30,000 last week after Tesla founder Elon Musk said the electric vehicle company would likely start accepting it again as payment.
Musk wants to reverse a decision he took two months ago because of the environmental impact from the heavy use of fossil fuels in cryptocurrency mining.
"I wanted a little bit more due diligence to confirm that the percentage of renewable energy usage is most likely at or above 50%, and that there is a trend towards increasing that number, and if so Tesla would resume accepting Bitcoin," Musk said.
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