Kazakhstan, above all, is the second largest Bitcoin mining country on earth. Then, in a year, it capitulated. While mainstream news commentators are quick to pick on the reasons why the Kazakh authorities are against Bitcoin mining operations, the consequences of greening the network are not being reported.
But since Kazakhstan is powered 87.6% by fossil fuels, less mining means a higher mix of clean energy for the Bitcoin network.
How much higher?
That’s what I asked myself. And the answer I found was surprising.Source
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At its peak in October 2021, Kazakhstan achieved 18.3% of the global hash rate.
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But what hasn’t been widely reported is that by January 2022 (the last time Cambridge University updated its Bitcoin mining map), it had dropped to 13.2% of the global hash rate.
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And before the real pressure came on the miners from the Kazakh authorities. This pressure comes in three waves:
- A raid in which equipment from 13 illegal mining farms was seized. The operation is estimated to use more than 200 megawatts (MW) of power.
- Follow-up raids on known illegal mining activities seized assets from 106 other mining operations.
- Reduction of mining regulations. Bitcoin mining can now only be done legally between midnight and 8:00 a.m. and on weekends: a reduction from 168 mining hours per week to only 64 mining hours per week.
Doing some calculations, even at the most bullish upper threshold, Kazakhstan currently represents at least 6.4% of the global hash rate.
So what does this mean for Bitcoin’s clean energy mix?
It makes a pretty significant difference, as you can see. The exodus from Kazakhstan turned the grid into a majority of clean energy users. I ran a simulation of the energy supply model with Kazakhstan still at 18.3% of the global hash rate. Here’s what it looks like: the majority use fossil fuels.
Because Kazakhstan uses so much coal (a heavier emitter of greenhouse gases than natural gas) the difference in emissions is even more significant. At 18.3% of the total hash rate, Bitcoin emissions would be 36 metric tons of carbon dioxide equivalent to C(MTCO2e). But at current levels, emissions are only 32.4 MtCO2e. That reduces emissions by 10%.
A ten percent reduction in emissions is significant. There are few industries in the world that have achieved this within a year. And if there is, you’ve probably heard all about it.
Important sidenote: Have you ever seen a Bitcoin mining unit with its own internal combustion engine? No mining I. Bitcoin, like electric vehicles (EVs), uses electricity as a power source. So, if EVs can claim to be zero emissions, so can Bitcoin mining. So, when we talk about emissions, we are talking about indirect emissions caused by electricity components that are produced using fossil fuels.
Summary: The Bitcoin network continues to track in the right direction, but you’ll have to dig to find this.
And some final thoughts about our goals:
According to my model, the Bitcoin network uses 4.7% more clean energy today than just a year ago. Factors that cause this are:
- Exodus from Kazakhstan
- Migrating Marathon’s remaining coal mining to renewable supply
- The migration continues to the most renewable mining, off-grid mining
This trend shows no sign of abating. Based on the trendline, the network is set to use 4% more clean energy per 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. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.