Why China has imposed a crackdown on cryptocurrencies
Bitcoin production in China emits as much CO2 as the whole of Portugal: 57 million tons per year, explains Rystad Energy
Mining bitcoin and other cryptocurrencies consumes large amounts of energy. Increasing scrutiny over the environmental impact of this activity has recently led the Chinese government to order a crackdown on projects across the country, and now most of them have already been stopped. An analysis by Rystad Energy shows that, until recently, Chinese bitcoin production emitted as much CO2 as the entire country of Portugal, a whopping 57 million tons (Mt) per year.
CHINA HAS EXTRACTED 65% OF THE WORLD'S BITCOINS
China has mined around 65% of the world's total bitcoin using electricity that was 63% coal-fired in 2020. This means that at least 40% of the bitcoin mined globally was fueled solely by the burning of coal in China.
CHINESE EXTRACTION REQUIRED 86 TWH PER YEAR
About 7,815 terawatt hours (TWh) of electricity was produced in China last year. In addition to coal, hydroelectric power plants supply around 17% and the remaining 20% comes from a mix of other sources including wind, nuclear, gas and solar. Bitcoin mining in China is estimated to require 86 TWh of electricity per year, or 1.1% of China's total electricity demand.
LAST YEAR EMISSIONS TO PRODUCE 5,200 MILLION TONNES OF ENERGY, 57 ONLY TO EXTRACT BITCOIN, A LEVEL SIMILAR TO PORTUGAL
Estimated carbon emissions from China's total energy production were around 5,200 Mt last year, most of which was emitted by coal-fired power plants across the country. Applying this to the share of electricity used by the production of bitcoin, we find that the total carbon emissions from this activity would be around 57 Mt, a level similar to the total emissions of countries such as Portugal or Peru, the energy consultancy highlighted. .
BECAUSE IT MAKES SENSE TO STOP THESE EMISSIONS
“Even though the share of emissions from bitcoin mining in China remains small compared to other economic activities, it still makes sense for the Chinese government to curb cryptocurrency production as the energy intensity of this activity is very high. This is one of the many sectors that China needs to focus on to deliver on its commitment to become carbon neutral by 2060 and peak emissions by 2030, ”said Carlos Torres Diaz, Rystad's head of energy and gas research. Energy.
WHERE THE CHINESE BITCOIN EXTRACTION IS LOCATED
Some cryptocurrency advocates argue that China's mining occurs mainly in provinces with a high share of renewable energy. Rystad Energy then studied the sources of electricity supply in the regions where bitcoin mining takes place to estimate bitcoin-related carbon emissions.
Bitcoin mining takes place across the country, but 59% of activity occurs in four provinces: Xinjiang in the northwest of the country, Sichuan in central China, Mongol in the north, and Yunnan in the south, according to data from the Cambridge Center for Alternative Finance.
THE CASE OF XINJIANG
Xinjiang is one of the largest provinces in China and most of the energy generated comes from coal-fired power plants. There are more than 200 coal-fired power generation units with an estimated aggregate capacity of nearly 74 gigawatts (GW). Hydropower was until recently the second largest source of electricity with around 2.2 GW of operating capacity, but it was overtaken by solar photovoltaics with a total installed capacity of 3 GW. Existing installed capacity suggests that around 96% of the province's electricity is generated from coal and 4% from renewable energy, which would indicate a large carbon footprint for the province's bitcoin mining.
THE ROLE OF OTHER AREAS
Unlike Xinjiang, the installed power generation capacity in Sichuan is mainly hydroelectric. The province has more than 100 GW of hydroelectric capacity, while coal is the second largest source with less than 20 GW of installed capacity.
However, to say that bitcoin mining in Xinjiang is dirty while in Sichuan it is clean would oversimplify things, admits Rystad Energy. China's power generation system is very well integrated, with high-voltage transmission lines branching off from high-demand centers on the southeastern coast and to the far west and northeast.
THE CONCLUSIONS OF RYSTAD ENERHY
“To estimate the carbon footprint of bitcoin we must therefore look at the national energy mix rather than the mix in the individual provinces where the extraction takes place. The distribution of the different sources of electricity generation and transmission lines across China suggests that energy consumption from mines could be proportional to the country's total electricity consumption with around 67% supplied from fossil fuels and the rest from sources that they do not emit carbon. This leads us to the conclusion above: that Chinese bitcoin mining contributed to a significant amount of global emissions each year, ”Rystad Energy pointed out.
(Extract from an article published on Energia Oltre ; here the full article)
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/bitcoin-cina-emissioni-co2/ on Mon, 26 Jul 2021 04:35:36 +0000.