Energy-intensive bitcoin mines in China, which support about 80 percent of global cryptocurrency trading, could undermine the country’s environmental targets, according to a study in the journal Nature.
Bitcoin and other cryptocurrencies rely on blockchain technology, which is a common trading base with imports that must be verified and encrypted. The network is made up of “mines” that use high-power computers to confirm transactions.
About 40% of China’s “mines” use coal, while the rest use renewable sources. However, coal-fired plants are so energy-intensive that they could undermine Beijing’s efforts to peak carbon dioxide emissions by 2030 and China’s goal of having a neutral carbon balance by 2060.
The study, published in Nature today, claims that cryptocurrency “mines” in China, if left unchecked, would have generated 130.5 million metric tons of carbon dioxide by 2024, a size close to that of Italy’s annual greenhouse gases, or Saudi Arabia. According to the study, Chinese companies with access to cheap electricity and equipment controlled, by April 2020, 78.89% of the global blockchain activity related to cryptocurrencies.
According to the study’s author, the activity could turn into such a threat that it could undermine the effort to reduce emissions. At the same time, it is pointed out that Beijing must focus on upgrading the electricity grid to ensure a stable supply of renewable sources and to provide incentives for the “mines” to be transferred to clean energy areas.
By 2021, the cryptocurrency mining industry is expected to use 0.6% of the world’s total electricity generation, more than Norway uses per year, according to Cambridge University. It is noted that bitcoin set a new record in March, as it exceeded the limit of $60.000 for the first time. Given its profitability, the imposition of coal taxes was not enough to prevent “mining”.
China banned cryptocurrency trading in 2019 to prevent money laundering, though mining is allowed. Carbon-rich areas are now under pressure as they struggle to reduce emissions. Last month, Inner Mongolia announced the end of cryptocurrency mining at the end of April as it failed to meet its annual energy targets.