Bitcoin mining in China is so carbon intensive that it could threaten the country’s emissions reduction targets, according to new research.
China wants its emissions to peak in 2030 and has plans to be carbon neutral by 2060. The cryptocurrency’s carbon footprint is as large as one of China’s ten largest cities, the study found. China accounts for more than 75% of bitcoin mining around the world, researchers said.
The study was written by academics from the University of the Chinese Academy of Sciences, Tsinghua University, Cornell University, and the University of Surrey. It was published by the peer-reviewed journal Nature Communications.
Some rural areas in China are popular among bitcoin miners, mainly due to the cheaper electricity prices and undeveloped land to house the servers. Miners play a dual role, effectively auditing bitcoin transactions in exchange for the opportunity to acquire the digital currency.
The process requires enormous computing power, and in turn, consumes huge amounts of energy. Already, bitcoin-related emissions in China exceed the total emissions of the Czech Republic and Qatar in 2016. By 2024, China’s bitcoin operations will exceed the total energy consumption of Italy and Saudi Arabia and would rank 12th among nations.
At its peak, it could account for about 5.41% of China’s electricity generation emissions. The researchers said a carbon tax would be relatively ineffective for bitcoin, and suggested “site regulation” policies instead.
The researchers said the “attractive financial incentive of bitcoin mining” has caused an arms race in dedicated mining hardware
The price of the cryptocurrency surged during the pandemic, rising from $7,000 last April to pass $60,000 in March before hitting a period of volatility.
Bitcoin’s price increase was pushed higher by well-known companies adopting it as a method of payment, including electric carmaker Tesla. The Covid-19 pandemic also likely played a part, with more people shopping online and moving further away from physical currencies.
Critics have long charged that in addition to its environmental impact, its main use is as a financial speculation tool rather than as a currency. They also worry that it is prone to market manipulation by a few large players.