Bitcoin mining to consume more electricity than whole of Australia by 2024

The amount of electricity consumed by bitcoin mining operations will surge over the next three years, consuming more power than entire countries, including that of Australia, new research has predicted.

In a new research paper published in the journal Nature Communications, researchers from the Chinese Academy of Sciences and Tsinghua University have projected that on current trends, bitcoin mining electricity consumption will more than double from its current levels, peaking in 2024.

At that time, the researchers say, the total electricity consumption of Bitcoin miners will reach as high as 297 terawatt-hours annually if no measures are undertaken to curb energy use or emissions. This will be more than the annual electricity consumption of the whole of Australia, which currently stands at around 265 terawatt-hours per year.

The surge in electricity consumption will see bitcoin rank as the equivalent of the 12th largest electricity consumer amongst all countries, higher than the likes of major European economies, including Italy and Spain.

The researchers say that without stricter regulatory controls, the growing energy demand of Bitcoin and cryptocurrencies more broadly could undermine global sustainability efforts.

Using a simulated carbon emissions model, the research led by researchers Dabo Guan and Shouyang Wang estimates that Bitcoin mining will be responsible for 130 million tonnes of carbon emissions – higher than the emissions of countries like Qatar and the Czech Republic.

The operation of cryptocurrencies like bitcoin requires substantial computational power to process transactions and to maintain a transaction ledger.

Computers dedicated to processing these transactions are awarded in return for their computational power by being issued units of the cryptocurrency.

The offer of potentially lucrative cryptocurrency units in return for computing resources has sparked a surge in investment in dedicated ‘mining’ equipment, which has sent energy consumption surging with it.

This has particularly been the case in China, where access to cheaper supplies of electricity and ready access to the necessary computer equipment has made bitcoin mining a profitable venture.

It is estimated that around 70 per cent of bitcoin miners are located in China.

But the researchers said that the operations are already causing electricity demand throughout China to increase, with bitcoin mining ranking in the top 10 among China’s 182 prefecture-level cities, as well as amongst 42 major industrial sectors in China.

Bitcoin is already responsible for approximately 5.4 per cent of China’s electricity emissions.

The researchers warned that the bitcoin mining operations could undermine China’s efforts to meet its targets under the Paris Agreement.

“The Paris Agreement is a worldwide agreement committed to limit the increase of global average temperature,” the research paper says.

“Under the Paris Agreement, China is devoted to cut down 60 per cent of the carbon emission per GDP by 2030 based on that of 2005. However, according to the simulation results of the [blockchain carbon emission] model, we find that the carbon emission pattern of Bitcoin blockchain will become a potential barrier against the emission reduction target of China.”

As Ketan Joshi reported for RenewEconomy, the quest to supply Bitcoin mining operations with cheap sources of power have seen operators turn to fossil fuel generators for their supplies of electricity.

The researchers suggest that an ‘individualised’ approach that encourages miners to shift away from regions predominantly powered by coal and into regions that can act as a source of zero emissions electricity.

The paper warns that the imposition of carbon prices or taxes may only work to shift miners to other countries with lower energy costs, potentially seeing them continue to use supplies of fossil fuel electricity.

The researchers say miners should be moved into regions with higher proportions of renewable energy supplies, such as hydroelectricity, and supporting operations to take advantage of surplus electricity supplies.

While this ‘site regulation’ approach modelled by the researchers showed electricity demand growing even higher, potentially reaching 320 terawatt-hours by 2025, however, emissions will be substantially lower.

“Among all the intended policies, Site Regulation shows the best effectiveness, reducing the peak carbon emission per GDP of the Bitcoin industry to 6 kg per USD. Overall, the carbon emission per GDP of the Bitcoin industry far exceeds the average industrial carbon intensity of China, which indicates that Bitcoin blockchain operation is a highly carbon-intense industry,” the paper says.