The lower energy consumption for mining Bitcoin has reduced the chances of carbon dioxide emissions. Chinese mining farms are migrating to settle in places with renewable energy like the United States.
Currently, Bitcoin mining consumes 62 Terawatt per hour (Tw/h), 60% less than its historical peak in May. The Cambridge Bitcoin Electricity Consumption Index (CBECI) reveals that consumption had reached 143 Tw/h during that month.
Massive disconnections in the People’s Republic of China led to that sharp drop in the hash rate. In March, the government of that country took measures to prohibit Bitcoin mining in its territory. Until that moment, the Asian nation concentrated around 65% of the total hash rate of the Bitcoin network.
When the punitive measures against miners took effect, consumption fell to the levels of late November. The process to generate Bitcoin now consumes much less energy, which has reduced the chances of carbon dioxide emissions. Cryptocurrency detractors argue that this is the main reason they are against the cryptocurrency.
Energy Consumption for Bitcoin Mining Pulls Back
New connections with equipment more efficient regarding energy consumption have contributed to this decrease in the hash rate. In other words, the increase in the hash rate in the West is much lower than at other times due to the low consumption by the new ASICs.
The Cambridge Bitcoin Electricity Consumption Index indicates that the decrease for efficiency has gone from 47 to 24 TW/h. That trend became one of the arguments that Bitcoin proponents used the most in the face of criticism.
The amount of energy sustaining the Bitcoin network is currently considerably less, according to the hash-consumption formula. For example, the onset of massive disconnections caused the hash rate to drop by between 40% and 50% from its all-time high.
At the same time, consumption has dropped by 60% on the same scale, which reveals the fundamental role that efficiency plays. These numbers do not include the energy consumption of mining-related processes that indirectly influence the hash rate.
Bitcoin Mining Becomes More Environmentally Friendly
At the beginning of 2020, the price of the pioneering cryptocurrency was close to USD 65,000. However, Tesla CEO Elon Musk said mining was harming the environment, causing its price to plummet. For that reason, the market value of Bitcoin is currently around USD 30,000.
Not everything is negative since the exit of mining from China has given greater strength to the Bitcoin network. Likewise, some provinces where there are no longer any miners now have coal-powered electricity.
Mining farms that emit greenhouse gases are migrating to places with renewable energy. The most prominent destinations include the United States, where Miami Mayor Francis Suárez offered miners to settle.
The Hash Rate Recovers with Less Consumption
New equipment that consumes energy more efficiently has contributed to considerably reducing the emission of greenhouse gases.
Therefore, the recovery of the hash rate to pre-ban levels in China could occur in the medium term. However, the level of consumption will not grow alongside this increase in the hash rate.
The above suggests that the future of Bitcoin mining as a business is promising. However, the activity represented an insignificant part of consumption and pollution compared to other sectors, even at times of highest consumption.
By Alexander Salazar
