The Cambridge Centre for Alternative Finance (CCAF), a research centre at Cambridge Judge Business School, has announced a new update to its Cambridge Bitcoin Electricity Consumption Index (CBECI) that provides estimates on the greenhouse gas emissions related to Bitcoin.
The CBECI was launched in July 2019 at the CCAF. A Mining Map was added to the Index in May 2020 to show the geographical distribution of the hashrate (the computational power provided to the network) – which showed that electricity consumption from Bitcoin was greater than that of some entire nations.
The new tool now adds an estimate of Bitcoin’s environmental footprint – providing daily estimates of the annualised and total greenhouse gas emissions related to Bitcoin.
“Environmentalists, financial institutions and policymakers are growing increasingly concerned about Bitcoin’s electricity consumption and its associated environmental repercussions,” says a blogpost outlining the new tool written by Alexander Neumueller, Digital Assets CBECI Project Lead at CCAF.
The blogpost goes on to highlight that, by mid-September 2022, approximately 199.65 million tonnes of carbon dioxide equivalent (MtCO2e) can be attributed to the Bitcoin network since its inception. While emissions have risen sharply in recent years, today things look a little different. According to the index, this year’s GHG emissions are about 14.1 per cent lower than the estimated GHG emissions in 2021, largely due to a substantial decrease in mining profitability leading to a decline in electricity consumption despite hashrate remaining relatively constant.
There have been many claims and counter-claims about Bitcoin’s environmental impact, some farfetched and based on over-simplification. According to the blog: “It is more important than ever to realise that the issue of Bitcoin’s environmental footprint is more nuanced and complex than a quick glance might suggest.”
The tool estimates the share of sustainable energy sources in Bitcoin’s electricity mix at 37.6 per cent, which is significantly lower than industry estimates suggest (59.5 per cent).
Additionally, the new tool estimates current greenhouse gas emissions of 48.35 MtCO2e, or 0.1 per cent of global greenhouse gas emissions, similar to the emissions of countries such as Nepal and the Central African Republic, and about half the emissions from gold mining. This estimate for the current annualised emissions is about 14 per cent lower than estimated emissions of 56.29 MtCO2e in 2021 – which the blogpost attributes to a shift to more efficient hardware by Bitcoin miners.
“A significant decrease in mining profitability led to a decline in electricity consumption despite substantial increases in hashrate,” the blogpost says. “Given the recent sharp decline in mining revenue per unit of computing power provided, a shift to more efficient hardware occurs, which leads to the, at least temporary, retirement of older, less efficient hardware.”