After nearly three weeks in the dark from the media, former FTX chief Sam Bankman-Fried is finally making public appearances. On Thursday, he partook in a live Twitter space to take questions directly from the crypto community. Here are the highlights from his interview and questioning. Sam Bankman-Fried said he is making media appearances in the name of transparency. He believes the community deserves answers. SBF claimed that he had little relationship with Alameda Research, over worries about conflicts of interest.…
Per a report from the Cambridge Center for Alternative Finance (CCAF), fossil fuels have been the primary energy source for BTC mining since the start of the year. The CCAF recently updated its Cambridge Bitcoin Electricity Consumption Index (CBECI). Its study claims that 62% of all the energy the leading token has consumed so far consists of coal-based energy.
BTC’s Energy-Intensive Mining
Bitcoin employs the proof-of-work consensus mechanism to create new tokens and validate transactions on the blockchain. The PoW system requires miners to use powerful computers to solve complex problems thus utilizing massive amounts of energy. According to researchers, BTC consumes as much energy as a small nation annually.
Thus, since its inception, Bitcoin has faced criticism from lawmakers, environmentalists, and others regarding its energy-intensive mining process. Various entities have sought to transition Bitcoin from fossil fuels that harm the environment to more sustainable energy sources. However, according to the findings from the CCAF’s study, they have made little progress.
Less than 40% of the energy used in mining this year came from sustainable sources. Rather, coal and natural gas, energy sources stemming from fossil fuels appear to have seen significant use. The CCAF study pointed out how Bitcoin electricity mix consumption has evolved in recent years.
Changes in the Mix Over the Past 2 Years
In 2021, Tesla’s decision to renege on accepting BTC payments brought attention to Bitcoin’s energy consumption. While a lot of efforts were made months following Tesla’s decision to reduce BTC’s carbon footprints, it appears those efforts may be waning.
According to CCAF, coal alone reportedly comprised 37% of Bitcoin’s total energy consumption this year making it the single highest energy source Bitcoin miners employ. However, this is still a decrease from 2020, when coal power fueled 40% of global Bitcoin mining. Notably, nuclear energy and natural gas are reportedly the fastest-growing power sources for BTC mining this year.
Natural gas saw its portion of the total BTC power consumption increase significantly in the last 2 years. Natural gas shares rose 10%, from 13% in 2020 to 23% in 2021. Nuclear energy consumption meanwhile rose from 4% last year to 9% in 2022.
As for sustainable sources, hydropower emerged as the largest renewable energy source with a 15% share of BTC’s total electricity consumption. Notably, this represents a marked decline in clean energy over the last 2 years. In 2020, hydropower consumption rested at 34%, more than double the current value.
China’s Mining Ban Impacted Bitcoin’s Energy Mix
CCAF credited the changes in the energy mix to miner migration over the past year after China’s crypto crackdown. In 2021, the Chinese government placed a blanket ban on mining in the nation severely impacting the global mining industry. At the time, Chinese miners accounted for about 65% of the global hash rate.
Mining farms in the southeast Asian nation mostly utilized hydroelectricity. Hence it made up a major portion of the BTC energy mix, 33.7%, while coal comprised 40.4%. Of course, post-ban hydropower consumption dropped majorly.
The Chinese government’s ban on cryptocurrency mining and the resulting shift in Bitcoin mining activity to other countries negatively impacted Bitcoin’s environmental footprint,” the CCAF observes.
The study also pointed out that the electricity mix differs based on region. Kazakhstan’s mining industry still utilizes fossil fuels majorly. However, in nations like Sweden, sustainable energy makes up 98% of the energy mix.
With the CCAF’s report in view, BTC may face reignited criticism regarding its energy consumption. Especially following Ethereum’s migration to proof-of-stake, environmentalists have called for the network to adopt PoS as well.