Carbon Emission Risks Impacting the Cryptocurrency Mining Industry

Mining Industry Consuming Significant Amount of Electricity
Facing Carbon Emission Risks Amid Global Climate Change Initiatives
"Only 40% of Total Energy Use from Renewable Sources"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Suhwan] "The Bitcoin mining industry cannot escape the stigma of polluting the environment by using only cheap energy sources to generate profits."

The Wall Street Journal (WSJ) recently evaluated the energy consumption of the cryptocurrency mining industry in this way.

The cryptocurrency mining industry is facing a risk different from the regulatory issues that began earlier this year. As the global momentum for climate change response intensifies, the carbon emissions problem of the mining industry, which consumes a massive amount of energy, is emerging as a new risk.

Paolo Natali, a researcher at the Rocky Mountain Institute, a climate change research organization, pointed out that "cryptocurrency suffers from the problem of extreme carbon emissions" and mainly relies on fossil fuels such as coal, which are inexpensive.

Bitcoin mining requires a considerable amount of computational work, and this involves running many high-performance computer machines, inevitably increasing electricity consumption.

According to research by the University of Cambridge in the UK, the electricity consumption of the global cryptocurrency mining industry last year exceeded the annual electricity consumption of Argentina in South America.

In particular, the lower the price of energy sources, the greater the profits for the industry. This is why the mining industry is more likely to rely on cheap fossil fuels.

Accordingly, some mining companies are restarting fossil fuel power plants to obtain cheap energy sources.

At the end of last year, Marathon Digital Holdings, a Bitcoin mining-related company listed on the US stock market, restarted a closed coal power plant located in Montana.

[Image source=AP Yonhap News]

Alex de Vries, an economist who created the Bitcoin Energy Consumption Index, said, "If you are someone mining cryptocurrency, you would care about electricity costs but probably wouldn’t have the luxury to worry about climate issues."

Ultimately, the cryptocurrency mining industry is facing criticism for prioritizing profits over the environment and causing climate problems.

Conscious of such criticism, the cryptocurrency industry launched the Crypto Climate Accord in April. This accord, involving over 180 related industry companies, was established with the goal of achieving 'carbon zero' in the cryptocurrency industry by 2030.

While the apparent reason for the cryptocurrency industry's active efforts to reduce carbon emissions is climate change response, the real driving force is the pressure from investors to reduce carbon emissions.

WSJ reported, "Investors in the current market are showing more interest in reducing carbon emissions," adding, "They are demanding more efforts on carbon issues from the cryptocurrency industry as well."

Government authorities are also taking serious measures regarding the cryptocurrency carbon emissions issue, which is expected to increase the industry's carbon risk.

Recently, the New York State Legislature has been pushing a bill to completely ban fossil fuel use by miners within New York State.

Additionally, the US Securities and Exchange Commission (SEC) is reportedly considering mandating climate-related data disclosure for companies listed on the stock market.

In response to these regulatory pressures, a movement to switch to eco-friendly energy is spreading within the cryptocurrency industry.

[Image source=Yonhap News]

Gryphon Digital Mining, a miner participating in the Crypto Climate Accord, recently announced that it has achieved carbon zero and uses only electricity generated by hydropower plants for all mining operations.

Coinbase, the largest cryptocurrency exchange in the US, also takes environmental issues seriously and stated, "We will soon announce several measures to address climate change issues."

While voices of self-reflection and actual actions are emerging within the industry, criticism remains that there is still a long way to go.

According to recent research by the University of Cambridge, only 40% of the total electricity used for cryptocurrency mining currently comes from renewable energy sources.

WSJ analyzed, "The cryptocurrency mining industry is struggling to reduce carbon emissions," and "The industry's greatest concern is precisely the carbon emissions issue."

This content was produced with the assistance of AI translation services.