Erik Weijers, 8 months ago

How sustainable was Bitcoin mining industry in Q2 2022?

Each quarter, the Bitcoin Mining Council (BMC) releases survey data on the state of the global BTC mining industry. The most recent report shows that the estimated energy mix of mining comes 59% from renewable sources.

The BMC has been in existence since the beginning of 2021 and is largely made up of mining companies from the United States. That country currently accounts for most of the worldwide mining power. While not all miners in the world participate in the BMC, more than half are represented. As a result, the data can be used with some degree of reliability as estimates for the total network.

Sustainable energy mix

Bitcoin's energy consumption is a problem in the eyes of many outsiders. Recall that energy consumption goes hand in hand with network security. That's called proof-of-work. For anyone who has trouble with money based on proof-of-work: compare Bitcoin mining to mining gold, which literally requires mining, which causes environmental damage. In comparison, Bitcoin mining, at least in theory, can be done entirely based on renewable resources.

How does this stand? Of those participating in the BMC, the percentage of sustainably generated electricity (wind, solar, heat) is now 66%. It is estimated that the non-participating parties will not reach this percentage but that the global average could be 59%: a 6% improvement from a year ago. This would make Bitcoin mining one of the most sustainable industries. It is estimated that CO2 emissions from the Bitcoin network are 0.09% of global emissions. Because its relatively high sustainability rate, this is a lower figiure than the 0.15% of global energy consumption that Bitcoin accounts for.

Efficiency Improvement

The efficiency of the Bitcoin network is expressed computational capacity per amount of energy. The hashrate (computational capacity) increased 137% in the last 12 months while energy consumption increased only 63%. This efficiency improvement of roughly 50% is largely due to semiconductor development. The new generation of mining chips require less energy per amount of computations.

By the way, the report shows that the hashrate has dropped a bit for the first time in many months. It is traditionally the case that the hashrate of miners follows the price, but with a delay. Only when the bear market has been going on for months does the hashrate start to drop. This is because company decisions simply take time to be implemented.

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