Key facts: According to the IMF, the environmental impact of cryptocurrency mining is “a cause for concern.” Various reports show that miners mostly use “green” or renewable energy. The International Monetary Fund (IMF) accuses Bitcoin mining and artificial intelligence (AI) data centers of being responsible for 1% of global carbon emissions due to their electricity consumption. According to a recent IMF blog post, Bitcoin mining and data centers consumed 2% of global electricity in 2022. That figure could rise to 3.5% in three years, based on projections made by the International Energy Agency (IEA). This would be equivalent to the consumption of Japan, which ranks fifth among the countries with the highest electricity demand in the world. The IMF estimates that if nothing is done about it and everything continues as it is, Bitcoin and cryptocurrency mining would be generating 0.7% of global carbon emissions by 2027. Given how alarming their announcements seem, IMF proposes a substantial increase in the cost of electricity for Bitcoin miners and AI data center operators. In its opinion, an 85% increase in the electricity rate for miners would be necessary to force them to reduce their consumption and their environmental impact. The international entity affirms that measures of this type would not only help to achieve the established objectives regarding CO2 emissions, but would also would serve to promote the use of renewable energy sources.
IMF projections on electricity consumption and CO2 emissions from Bitcoin mining and artificial intelligence data centers. Source: IMF.
How much harm does Bitcoin mining do to the environment?
For years, one of the claims that many Bitcoin detractors have used against it is that the operation of this network consumes too much electricity. While this is true (because it contributes to the security of the Bitcoin network), a large number of reports and studies today reveal that Bitcoin mining does not generate the environmental impact that some claim. According to investor and researcher Daniel Batten, out of 10 detailed analysis reports that were published in the last 2 years on the impact of Bitcoin mining on the environment, 9 of them showed positive externalities on this activity. The only one with negative externalities was based on outdated data from 3 years ago. In itself, miners are the most benefited from this activity. use renewable and, if possible, independent energy sources. This is so that they are not limited by the capacity of the local power grid. In this sense, one of the advantages that Bitcoin mining companies have over other types of data centers is that they can minimize and even stop their activity, without generating global chaos. This flexibility allows them to work hand in hand with local energy networks and help balance their load. As BitcoinDynamic has explained, another advantage of Bitcoin mining is that it can make use of energy in the place where it is generated. There are companies that are placing mining farms near oil wells to take advantage of the gas obtained and thus, not simply burn it, but take advantage of that resource. Something that also increases the profitability of these activities.
Instead of being burned, surplus natural gas production can be used to mine Bitcoin. Source: pichitstocker/ stock.adobe.com On the other hand, it is worth noting that companies that manufacture mining equipment always aim for the efficiency of their hardware, so that they can generate the greatest mining power with the lowest possible consumption. This is how a much greater increase in the Bitcoin network hashrate can be achieved in relation to the energy it demands.