Can the red-hot Bitcoin really become "green"?

Original title: "Bitcoin is red, can it be green?" "

Can Bitcoin and environmental protection really have both? Digital currencies rely on so-called miners to keep going, their high-powered computers running day and night, drawing electricity to perform the calculations used to verify transactions. Since almost two-thirds of the computing power is in China, and China's coal is the largest source of electricity, this means that mining is generating huge non-green energy consumption. Supporters of Bitcoin believe that Bitcoin's carbon emissions are only a drop in the bucket on a global scale, and that the conversion to green electricity has already started and may continue to accelerate.

It's hard to say. In 2018, Bloomberg NEF estimated the amount of electricity consumed by Bitcoin-related activities at 20.5 terawatt-hours per year (1 terawatt-hour equals 1×109 kilowatt-hours, or 1 billion kilowatt-hours of electricity). Around the same time, Morgan Stanley estimated that figure was as high as 140 TWh. Annualized usage, which has been tracked by Cambridge University’s Center for Alternative Finance, jumped from 6.6 TWh in early 2017 to 67 TWh in October 2020 to 121.9 TWh in early February as Bitcoin’s price surged. Watt hours. According to Digiconomist's statistics on carbon emissions, Bitcoin's annual emissions are 37 million tons of carbon dioxide, which is equivalent to the annual emissions of New Zealand.

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Like an electric car or a data server or anything that runs on electricity, it depends on where you plug it in. A large number of other miners have flocked to upstate New York, the US Pacific Northwest, Texas and parts of Europe, where natural hydropower and wind power resources are so abundant that it is difficult for households and businesses to absorb them all. But like any business, miners are simply looking for places where electricity is cheaper.

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The calculations performed by miners are used to verify transactions in the network, and the difficulty increases with the increase of computing power. The Bitcoin program is designed to stop minting when the circulating supply reaches 21 million. Since nearly 19 million coins were mined in the world at the end of 2020, the difficulty of the system is now close to the highest level, which also means that miners need to find ways to generate more computing power.

The total pledge amount of the Ethereum Beacon Chain network has exceeded 9.9 million ETH: According to Jinse Finance, according to the latest data on February 17, the total pledge amount of the Ethereum Beacon Chain network has exceeded 9.9 million ETH. At the time of writing it is 9,904,517 ETH and the total number of validators is 295,292. Recently, the price of ETH temporarily rebounded above $3,000 and is currently about $3,068.30, but it has not yet formed an overall upward trend. [2022/2/17 9:57:53]

Some cryptocurrencies do not have the concept of mining. They rely on "staking", that is, users can get rewards for holding their coins. Bitcoin miners use expensive, custom-designed computer chips for mining. Miners for other cryptocurrencies often use cheaper general-purpose graphics cards originally designed for high-end gaming. But electricity is still the biggest raw material of the cryptocurrency market.

Opinion: Bitcoin futures trading is currently dominated by retail investors: Golden Finance reported that CryptoQuant CEO and founder Ki Young Ju shared the Bitcoin inflow dynamics of major derivatives exchanges on Twitter. In the final days of 2021, whales appear to be avoiding trading futures. According to the Bitcoin flow chart (30-day moving average) between spot exchanges and derivatives trading platforms, inflows to derivatives platforms appear to be at their lowest level since 2018. So it's likely driven by small retail investors. [2021/12/25 8:02:53]

Voice of the Opponent

A growing number of environmentalists see Bitcoin as a colossal waste of resources and a driver of climate change. For countries with unstable power systems, miners also increase the risk of national grid outages. Some of the recent power outages in Iran have been blamed on a surge in mining activity. As more and more examples of mining using electricity generated from renewable resources grow, Bitcoin miners will in turn compete for limited green electricity with other industries that pursue zero carbon emissions, such as transportation, heating and industry.

Although Bitcoin is consuming a lot of electricity, it is still a drop in the bucket compared to the world's power generation. Even as bitcoin prices have been skyrocketing, it has barely made waves in the electricity market, according to analysts at BloombergNEF. In Iran, however, government officials have pointed to bitcoin miners as one reason for power outages when the cold season hits and the country's electricity is strained. Therefore, Bitcoin's carbon footprint is negligible compared to cars, power plants, and many factories. The data can better show objective facts. A 2018 analysis estimated that the video game industry in the United States alone accounts for about 12 million tons of carbon emissions every year, which is one-third of the emissions generated by Bitcoin globally. one.

These people exist, but these initiatives have more to do with the search-zce for cheap electricity than with environmental concerns. Some bitcoin miners use excess natural gas that is simply burned to power their mining equipment. A large chunk of production has moved to regions with abundant hydropower supplies, such as Iceland, Norway, Canada and parts of Russia. According to the Cambridge Bitcoin Electricity Consumption Index, China’s share of Bitcoin’s monthly hash rate fell by 10 percentage points to 65% in the second quarter of 2020 compared to the third quarter of 2019. Nic Carter, co-founder of the research firm Coin Metrics, said of China’s mining industry in an interview with Bloomberg TV, “Of course there is some bitcoin that is mined with coal. But if you look at other provinces in China, there is also a lot of bitcoin there.” mining activities, but in those places, it is basically dependent on hydropower."

The effects are already being felt. In February 2021, Tesla said it had bought $1.5 billion in bitcoin and would begin accepting cryptocurrencies as a form of payment. Tesla’s dual move was a key catalyst for a new bull market in cryptocurrencies at the time. But today, Tesla CEO Elon Musk dealt the crypto community a blow by suspending accepting bitcoin payments, citing environmental concerns. The decision sparked a plunge in bitcoin that spread to many other digital currencies. Some strategists see environmental concerns as a major threat to bitcoin's value in the long run.

Source: Bloomberg

By Jesper Starn, Will Wade, and Josh Saul

Translation: Chen Zou

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