ESG analyst debunks the popular myth of Bitcoin powered by fossil fuel

Daniel Batten says more than half of Bitcoin mining energy comes from renewable sources

mining site filled with bitcoin coins
Bitcoin mining contributes 0.1% to the total greenhouse gases

On March 31, Daniel Batten, a ClimateTech investor and ESG analyst, published an article to contradict claims made by the Cambridge Centre for Alternative Finance (CCAF) that the main energy source for Bitcoin is coal.

Batten conducted research that considered both off-grid and on-grid mining. According to the analyst, the majority of Bitcoin miners (23%) are powered by hydroelectric plants. He mentioned that 15.8% of on-grid facilities use hydropower, while over 50% of off-grid miners rely on this source of energy.

"Sustainable mining companies such as OceanFalls, Blockfusion, Hut8, Iris, Sato, Terawulf, Statar/Lake Parime, Gridshare, and HPG are examples of companies that are either 100% powered by hydro or majority-hydro powered," Button noted. The next leading sustainable energy source for Bitcoin is wind, which accounts for about 14% of total Bitcoin mining energy.

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At the same time, Batten showed that only 22.92% of energy comes from coal and 21.14% from natural gas.

Still, the 2021 article "Bitcoin, energy use and climate change" by César Artiga and Meraris López cites other figures from the University of Cambridge, which shows that hydropower is the main source of energy for Bitcoin in Europe, North America, Asia-Pacific, and Latin America and the Caribbean, ranging from 61% in Europe to 67% in Latin America and the Caribbean.

The data also included other energy sources such as natural gas, coal, wind, and petroleum derivatives, as well as nuclear, solar, and geothermal. However, the report emphasiemphasizedsed that crypto miners often use multiple energy sources at the same time, so the percentage of use of certain sources does not sum up to 100%. This makes it quite difficult to identify the actual usage of certain energy sources.

For example, it was reported that crypto miners in Asia-Pacific countries not only used 65% of energy from hydropower, but also used the same percentage of coal energy. However, even according to this data, Asia-Pacific was the only region that relied heavily on coal. 38% of miners there also used natural gas, while 12% used petroleum derivatives. The next largest consumer of coal was North America, where 28% of crypto miners were powered by coal, while in Europe, there were only 2% of coal-powered facilities. Latin America and the Caribbean had no such miners at all.

Bitcoin's high energy consumption is indeed a fact. According to a 2017 article by The Guardian, a single Bitcoin transaction consumes "almost 300KWh of electricity - enough to boil around 36,000 kettles full of water," whereas Visa data centers reportedly use only 2% of the electricity that Bitcoin consumes. That year, the Bitcoin network processed fewer than 350,000 transactions a day, compared to about 200 million Visa's transactions.

However, such statistics are incomplete because electronic transfers via Visa are directly connected to banks, which makes it impossible to calculate the actual energy consumption of the entire infrastructure behind Visa transactions.

Furthermore, in 2018, Camilo Mora and other scientists from the University of Hawai'i at Mānoa, Honolulu, HI, USA, published an article titled "Bitcoin emissions alone could push global warming above 2°C," in which they reported that Bitcoin generated 69 million tons of carbon dioxide equivalent (MTCO2e). Meanwhile, the 2022 Cambridge University study mentioned by Batten in his report" found that emissions decreased to 48.35 MtCO2e. This amount represents 0.1% of total greenhouse gas emissions in 2022.

Although the emissions are undeniably high, they significantly decreased within four years, which is a great achievement often overseen by many researchers.

Read also: Greenpeace's anti-Bitcoin artwork becomes a meme among Bitcoiners

Moreover, looking at other statistics for 2022 published by the academic publication Our World in Data, it is clear that Bitcoin mining accounts for only a fraction of all industries and households that produce greenhouse gases. For example, energy consumption by commercial buildings, including banks, accounts for 6.6% of total greenhouse gases. Landfills and wastewater emit 3.2% of greenhouse gases, while deforestation produces 2.2%.