A new study published Tuesday by the Cambridge Center for Alternative Finance (CCAF) shows that almost 62% of Bitcoin’s total energy consumption since January 2022 was generated from fossil fuels. This means renewable sources only amounted to 38% of the total energy consumed by BTC miners this year.
As a Proof-of-Work (PoW) blockchain, processing and validating BTC transactions (mining) requires high computational power and solving mathematical puzzles with powerful computers that consume large amounts of energy.
Coal Becomes Highest Single Power Source for BTC Mining
The research, delivered to the CCAF’s Bitcoin mining data index Cambridge Bitcoin Electricity Consumption Index (CBCI), highlights the drastic changes in Bitcoin electricity mix consumption over the past few years. The data shows that coal and natural gas are the fastest growing energy resources for bitcoin mining.
Coal alone recorded a significant growth of nearly 37% of the total Bitcoin energy consumption in early 2022, making it the highest single power source for mining activities. This is similar to the 40% of coal energy consumed in 2020.
Hydropower Drops to 15%
Regarding sustainable energy sources, hydropower led with a 15% share of the total energy sources used in BTC mining. However, hydropower consumption saw a massive decline, as it dropped from 34% in 2020 to 15% in 2021.
However, the role of natural gas and nuclear energy in Bitcoin mining has continued to grow in the past two years.
The shares of natural gas witnessed a significant increase from 13% in 2020 to 23% in 2021, while nuclear energy consumption jumped from 4% in 2021 to nearly 9% in 2022.
The study attributes the poor performance in the Bitcoin energy mix and price fluctuations between 2020 and 2021 to the relocation of major mining companies from China due to the crackdown in the country.
The CCAF research reveals that China contributed roughly 65% of the world’s total hash rate, with most of the energy sources derived from hydropower (33.7%) or coal, which accounted for (40.4%) of the total resources.
“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 study notes.
Climate Groups and Regulators Want Bitcoin to Adopt PoS
Due to the high energy consumption of the world’s largest cryptocurrency, climate groups and environmental regulators have called for Bitcoin to migrate to a proof-of-stake (PoS) to make the network more power efficient.
Earlier this month, environmental advocacy group Greenpeace USA said Bitcoin should change its consensus mechanism to PoS like Ethereum because PoW is fueling the climate crisis.
Similarly, in July, the European Central Bank (ECB) likened PoW to fossil fuel cars and PoS to electric vehicles, noting that Bitcoin’s benefit to society is “doubtful.”
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