The Cambridge Centre for Alternative Finance (CCAF), a research centre at Cambridge Judge Business School, announces a new update to its Cambridge Bitcoin Electricity Consumption Index (CBECI) that provides estimates on the greenhouse gas emissions related to Bitcoin.
The CBECI was launched in July 2019 at the CCAF. A Mining Map was added to the Index in May 2020 to show the geographical distribution of the hashrate (the computational power provided to the network) – which showed that electricity consumption from Bitcoin was greater than that of some entire nations.
The new tool now adds an estimate of Bitcoin’s environmental footprint – providing daily estimates of the annualised and total greenhouse gas emissions related to Bitcoin.
The Financial Times has posted a six-minute video on the topic, citing data from the Cambridge Centre for Alternative Finance that “provides much-needed insights” into Bitcoin’s impact on the environment.
“Environmentalists, financial institutions and policymakers are growing increasingly concerned about Bitcoin’s electricity consumption and its associated environmental repercussions,” says a blogpost outlining the new tool written by Alexander Neumueller, Digital Assets CBECI Project Lead at CCAF.
Bitcoin’s environmental footprint is ‘nuanced and complex’
There have been many claims and counter-claims about Bitcoin’s environmental impact, some farfetched and based on over-simplification, so “it is more important than ever to realise that the issue of Bitcoin’s environmental footprint is more nuanced and complex than a quick glance might suggest.”
The tool estimates the share of sustainable energy sources in Bitcoin’s electricity mix at 37.6% (26.3% renewables and 11.3% nuclear), which is significantly lower than industry estimates suggest (59.5%).
The new tool estimates current greenhouse gas emissions of 48.35 million tonnes of carbon dioxide equivalent (MtCO2e), or 0.10% of global greenhouse gas emissions, similar to the emissions of countries such as Nepal and the Central African Republic, and about half the emissions from gold mining.
Bitcoin miners using more efficient hardware
This estimate for the current annualised emissions is about 14% lower than estimated emissions of 56.29 MtCO2e in 2021 – which the blogpost attributes to a shift to more efficient hardware by Bitcoin miners.
“A significant decrease in mining profitability led to a decline in electricity consumption despite substantial increases in hashrate,” the blogpost says. “Given the recent sharp decline in mining revenue per unit of computing power provided, a shift to more efficient hardware occurs, which leads to the, at least temporary, retirement of older, less efficient hardware.”
A deep dive into Bitcoin’s environmental impact
Read this article “A deep dive into Bitcoin’s environmental impact” for more information about the new tool to measure Bitcoin’s environmental impact.
Image: Kanchanara on Unsplash
