Kazakhstan was, at its height, the second biggest Bitcoin mining nation on earth. Then, within a year, he capitulated. While mainstream news commentators quickly understood the reasons why Kazakh Authorities Turned Against Bitcoin Mining Operationsthe consequence this had on the greening of the network was not reported.
But since Kazakhstan is 87.6% powered by fossil fuels, less mining means a higher clean energy mix for the Bitcoin network.
How much higher?
That’s what I wondered. And the answer I found was surprising.Source
At its peak in October 2021, Kazakhstan enjoyed 18.3% of the global hash rate.
But what hasn’t been widely reported is that in January 2022 (the last time the University of Cambridge updated its Bitcoin mining card), it had already fallen to 13.2% of the global hash rate.
And that was before the real pressure came on the miners from the Kazakh authorities. This pressure came in three waves:
- A raid in which equipment from 13 illegal mining farms was seized. The operations were estimated at using more than 200 megawatts (MW) of power.
- A follow-up raid on the remaining known illegal mining operations that seized assets from 106 other mining operations.
- The regulated cessation of mining. Bitcoin mining can now only legally take place during off-peak hours of from midnight to 8:00 a.m. and on weekends: a reduction from 168 hours of mining per week to only 64 hours of mining per week.
Running some math even at the most bullish upper threshold, Kazakhstan now represents at best 6.4% of the global hash rate.
So what does this mean for Bitcoin’s clean energy mix?
It makes a pretty big difference, as you can see. The exodus from Kazakhstan tipped the grid to become a majority user of clean energy. I did a simulation on my energy source model with Kazakhstan still at 18.3% of the global hash rate. Here’s what it would have looked like: majority use of fossil fuels.
Because Kazakhstan uses so much coal (a much heavier emitter of greenhouse gases than natural gas), the difference with emissions is even greater. At 18.3% of the total hash rate, Bitcoin’s emissions would have been 36 metric tons of carbon dioxide equivalent C (MTCO2e). But at current levels, emissions are only 32.4 MtCO2e. That’s a 10% reduction in emissions.
A ten percent reduction in emissions is significant. There are few industries in the world that have achieved this in a year. And if there was, you would probably have heard of it.
An important note: have you ever seen a Bitcoin mining unit with its own internal combustion engine? Me niether. Bitcoin mining, like electric vehicles (EVs), uses electricity as a power source. As such, if an electric vehicle can claim to be zero emissions, so can Bitcoin mining. So when we talk about emissions, we are talking about the indirect emissions caused by the component of the electricity that was generated using fossil fuels.
Bottom Line: The Bitcoin network continues to head in the right direction, but you have to dig deep to find out.
And some final thoughts on where we’re headed:
According to my model, the Bitcoin network uses 4.7% more clean energy today than just a year ago. The factors that led to this are:
- The exodus from Kazakhstan
- The migration of Remainder of Marathon Coal Mining Towards Renewable Supply
- Continued migration to off-grid mining primarily based on renewables
This trend shows no signs of slowing down. Based on the trendline, the network is configured to use 4% more clean energy every year for the next three years.
As far as I know, this is the fastest rate of transition to renewable energy of any industry in the world.
This is a guest post by Daniel Batten. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
