New data from Cambridge University shows that the geography of mining has drastically changed over the last six months, and experts tell CNBC this will improve Bitcoin’s carbon footprint.
By this May, China has been accounted for nearly 75% of all Bitcoin miners at its peak, according to the Cambridge Centre for Alternative Finance.
But big China’s crypto crackdown this year set off a chain reaction in the mining world. More than 50% of the hashrate – the collective computing power of miners worldwide – dropped off the network. Fewer people mining means fewer machines running and less power being consumed overall, which contracted Bitcoin’s environmental impact.
Beijing’s new crypto rules took a lot of older and more inefficient gear offline. Miners migrating to other countries are now heading to the cheapest, and more often renewable, sources of energy on the planet.
Today, Bitcoin mining consumes roughly 70 terawatt-hours of energy per year or 0.33% of the world’s total electricity production. That is almost half of what it was in May and is roughly equivalent to the annual energy draw of countries like Bangladesh and Chile.
“The Bitcoin network is ruthless in its drive for the lowest cost,” said Mike Colyer, CEO of digital currency company Foundry. “Miners around the world are looking for stranded power that is renewable. That will always be your lowest cost. Net-net this will be a big win for Bitcoin’s carbon footprint.”
Colyer says the overall Bitcoin network will now be mostly made up of more efficient rigs that get about double the hashpower for the same amount of electricity. “This continues to significantly improve the security-to-energy ratio of the Bitcoin network,” he said.
“The cool thing about bitcoin that is underappreciated by a lot of the naysayers is that it’s… like a portable market; you can bring it right to the source of energy,” explained Steve Barbour, founder of Upstream Data, a company that manufactures and supplies portable mining solutions for oil and gas facilities.
The data shows that a whole lot of these miners are headed to cheaper energy sources in the U.S.
Investment bank Lazard released a yearly 2020 breakdown of energy costs by source, which shows that many of the most common renewable energy sources are either equal to or less expensive than conventional energy sources like coal and gas. And the cost of renewable power keeps going down.
Most new miners in North America will be powered by renewables or gas offset by renewable energy credits, which estimates that Bitcoin mining in the U.S. is more than 50% powered by green energy.
Miners migrating to North America are also preparing for a future in which their energy usage is questioned by investors and possibly regulated.
Bitcoin mining engineer Brandon Arvanaghi tells CNBC that the migration to the U.S., where innovation around Bitcoin and renewables is underway, will be positive for Bitcoin’s energy mix.
“Places like Texas have cheap electricity, in large part because of subsidies toward wind power,” said Arvanaghi.
Miami Mayor Francis Suarez has also popularized the idea of mining Bitcoin with nuclear power in Florida. Similar projects with nuclear-powered mining are already developing in other states, such as Pennsylvania and California.
“And all this is largely voluntary — the federal and state governments haven’t even gotten involved to require any renewable mix,” continued Arvanaghi.
In the long term, it will be good news for Bitcoin’s carbon footprint.