Fastest Growing Sources of Nuclear Power and Gas for Bitcoin Mining: Data

Bitcoin’s (BTC) electricity mix has changed dramatically in recent years, with nuclear power and natural gas becoming the fastest growing energy sources fueling Bitcoin mining, according to new data.

On Tuesday, the Cambridge Center for Alternative Finance (CCAF) released a major update to its Bitcoin mining data source, the Cambridge Bitcoin Electricity Consumption Index (CBECI).

According to Cambridge data, fossil fuels such as coal and natural gas made up nearly two-thirds of Bitcoin’s total electricity mix as of January 2022, accounting for more than 62%. Therefore, the share of sustainable energy sources in BTC’s energy mix was 38%.

The new study suggests that coal alone accounted for nearly 37% of Bitcoin’s total electricity consumption in early 2022, making it the largest energy source for BTC mining. Among the sustainable energy sources, hydroelectric energy was the largest resource, with a share of about 15%.

While Bitcoin mining relies heavily on coal and hydropower, the shares of these energy sources in BTC’s total energy mix have declined in recent years. In 2020, coal-fired power fueled 40% of BTC’s global mining. The share of hydropower more than halved from 2020 to 2021, from 34% to 15%.

Electricity mix for bitcoin mining from 2019 to 2022. Source: CCAF

Conversely, the role of natural gas and nuclear energy in Bitcoin mining has grown dramatically over the past couple of years. The share of gas in BTC’s electricity mix has risen from around 13% in 2020 to 23% in 2021, while the share of nuclear energy has increased from 4% in 2021 to nearly 9% in 2022.

According to Cambridge analysts, transfers of Chinese miners were a major reason behind the sharp fluctuations in Bitcoin’s energy mix in 2020 and 2021. China’s crackdown on cryptocurrencies in 2021 and the related migration of miners resulted in a strong drop in the share of hydroelectricity in BTC’s energy mix. As previously reported, Chinese authorities shut down a number of hydro-powered cryptocurrency mining farms in 2021.

“The Chinese government’s ban on cryptocurrency mining and the resulting shift of Bitcoin mining business to other countries has negatively impacted Bitcoin’s environmental footprint,” the study suggested.

Analysts also pointed out that BTC’s electricity mix varies enormously by region. Countries like Kazakhstan still rely heavily on fossil fuels, while in countries like Sweden the share of sustainable energy sources in electricity generation is around 98%.

The surge in nuclear power and gas in Bitcoin’s electricity mix supposedly reflects the “shift of mining power to the United States,” analysts said. According to the US Energy Information Administration, most of the nation’s electricity was generated from natural gas, which accounted for more than 38% of the country’s total electricity production. Coal and nuclear power accounted for 22% and 19% respectively.

Among other information related to the latest CBECI update, the study also found that the greenhouse gas (GHG) emissions associated with the extraction of BTC represented 48 million tons of carbon dioxide equivalent (MTCO2e) as of September 21, 2022, or the 14% less than estimated GHG emissions in 2021. According to the study’s estimates, current GHG emission levels relative to Bitcoin represent approximately 0.1% of global GHG emissions.

Combining all the previously mentioned results, the index estimates that by mid-September, around 199.6 MtCO2e can be attributed to the Bitcoin network since its inception. Analysts pointed out that around 92% of all emissions have occurred since 2018.

Total greenhouse emissions related to Bitcoin as of mid-September 2022. Source: CCAF

As previously reported, the CCAF worked on CBECI as part of its multi-year research initiative known as the Cambridge Digital Assets Program (CDAP). Institutional contributors to the CDAP include financial institutions such as British International Investment, Dubai International Finance Center, Accenture, EY, Fidelity, Mastercard, Visa and others.

Related: Bitcoin could become a zero-emission network: Report

The new CDAP results differ significantly from data from the Bitcoin Mining Council (BMC), which estimated the share of sustainable sources in Bitcoin’s electricity mix at nearly 60% in July.

“It does not include nuclear or fossil fuels, so it can be guessed that about 30-40% of the sector is powered by fossil fuels,” Bitfarms chief mining officer Ben Gagnon told Cointelegraph in August.

According to CBECI project leader Alexander Neumueller, the CDAP’s approach differs from the Bitcoin Mining Council when it comes to estimating Bitcoin’s electricity mix.

“We use the information from our mining map to see where the Bitcoin miners are, then look at the electricity mix of the country, state or province. As I understand it, the Bitcoin Mining Council is asking its members to report this data in a survey, “Neumueller said. He still said there are still some nuances related to the lack of data in the study.