China’s energy-intensive bitcoin mining operations, which fuel nearly 80% of global cryptocurrency trading, threaten to undermine the country’s climate goal, according to a report published Tuesday in the journal Nature (Apr 6), as reported by Bloomberg.
Bitcoin and other cryptocurrencies are generated by solving puzzles with the help of sophisticated computers that absorb massive amounts of energy, the majority of which is generated by coal-fired power plants.
According to the Nature report, if left unregulated, China’s bitcoin mining industry will produce 130.50 million metric tons of carbon emissions by 2024, which is comparable to Italy’s or oil-rich Saudi Arabia’s annual greenhouse gas emissions.
As of April 2020, Chinese businesses with connections to cheap energy and hardware were responsible for 75 percent of global bitcoin blockchain activities, according to the report. This entails the mining of new coins and the monitoring of cryptocurrency transactions.
Around 40% of China’s bitcoin mines are fueled by carbon, while the remainder are powered by renewable energy, according to the report.
However, since the coal-burning rigs are so big, they risk weakening Beijing’s commitment to curb carbon emissions by 2030 and achieve carbon neutrality by 2060, the report cautioned.
“The intensive bitcoin blockchain operation in China can quickly grow as a threat that could potentially undermine the emission reduction effort,”Wang Shouyang, Chinese Academy of Sciences
The government should prioritize grid upgrades to ensure a reliable supply of renewable energy, he added.
The value of a bitcoin has increased fivefold since last year, peaking at over US$61,000 in March and now floating well below the US$60,000 level.
Given the income on offer, Wang asserted that introducing carbon taxes would not be sufficient to discourage miners.
China outlawed cryptocurrency trade in 2019 to combat money laundering, but mining is authorized. Coal-rich areas are already displacing bitcoin mines with their attempts to minimize pollution.