China powers nearly 80% of the global cryptocurrencies trade, but the energy required could jeopardise its pledge to peak carbon emissions by 2030
China’s electricity-hungry bitcoin mines that power nearly 80% of the global trade in cryptocurrencies risk undercutting the country’s climate goals, a study in the journal Nature has said.
Bitcoin and other cryptocurrencies rely on “blockchain” technology, which is a shared database of transactions, with entries that must be confirmed and encrypted. The network is secured by individuals called “miners” who use high-powered computers to verify transactions, with bitcoins offered as a reward. Those computers consume enormous amounts of electricity.
About 40% of China’s bitcoin mines are powered with coal, while the rest use renewables, the study said. However, the coal plants are so large they could end up undermining Beijing’s pledge to peak carbon emissions before 2030 and become carbon neutral by 2060, it warned.
The Nature study on Tuesday found that unchecked, China’s bitcoin mines will generate 130.5m metric tons of carbon emissions by 2024 – close to the annual greenhouse gas emissions of Italy or oil-rich Saudi Arabia.
Chinese companies with access to cheap electricity and hardware handled 78.89% of global bitcoin blockchain operations as of April 2020, the study said. This involves minting new coins and keeping track of cryptocurrency transactions.
Co-author Wang Shouyang from the Chinese Academy of Sciences said: “The intensive bitcoin blockchain operation in China can quickly grow as a threat that could potentially undermine the emission reduction effort.”
The government should focus on upgrading the power grid to ensure a stable supply from renewable sources, Wang said. “Since energy prices in clean-energy regions of China are lower than that in coal-powered regions … miners would then have more incentives to move to regions with clean energy.”