A new study from Cambridge University reveals that sustainable energy now powers 52.4% of Bitcoin mining, marking a significant shift towards greener energy sources. This represents a notable increase from 37.6% in 2022.
The findings, published in the Cambridge Centre for Alternative Finance’s Digital Mining Industry Report, provide important insights into the environmental impact of Bitcoin mining.
They show an increasing reliance on renewable energy and nuclear power while also highlighting a major change in the use of fossil fuels, particularly natural gas.
This report offers valuable data for understanding Bitcoin mining’s evolving energy consumption and its role in the global energy landscape.
An increase in renewable sources
Bitcoin mining’s growing reliance on sustainable energy is one of the most significant trends in the sector today.
According to the latest findings from the Cambridge Digital Mining Industry Report, the share of Bitcoin mining that uses sustainable energy has increased dramatically to 52.4%—up from 37.6% in 2022.
This marks a clear shift towards renewable energy sources such as wind, hydropower, and nuclear power, which now make up a significant portion of the energy mix powering the Bitcoin network.
The report indicates that 42.6% of Bitcoin mining’s sustainable energy comes from renewable sources like wind and hydropower. Meanwhile, 9.8% is derived from nuclear energy.
This transition is an important step forward as the cryptocurrency industry faces growing scrutiny over its environmental impact, especially regarding carbon emissions.
Sustainable Bitcoin mining has become an essential talking point in the wider debate about how digital currencies can balance technological advancements with the growing concerns of climate change.
Moreover, this shift towards cleaner energy sources has been accelerated by advancements in mining hardware efficiency.
The study reports a 24% year-over-year improvement in hardware efficiency, which has helped reduce the overall environmental footprint of the industry.
Despite this positive development, Bitcoin mining continues to consume a significant amount of energy, with the industry estimated to use approximately 138 terawatt-hours (TWh) of electricity annually, which is about 0.5% of the world’s total energy consumption.
Natural gas overtakes coal
Another key revelation in the Cambridge University report is the shift in Bitcoin mining’s fossil fuel usage. Natural gas has now overtaken coal as the primary energy source for Bitcoin mining. Natural gas usage has surged to 38.2% of total energy consumption, compared to just 25% in 2022.
In contrast, coal’s share has fallen significantly to 8.9%, down from 36.6% in the previous year. This change reflects a broader trend in the mining industry, which has sought to move away from coal and other high-emission fossil fuels towards cleaner alternatives like natural gas.
This transformation in the energy mix is critical for addressing Bitcoin mining’s environmental impact. While natural gas is a fossil fuel, it is considered cleaner than coal due to lower carbon dioxide (CO2) emissions per unit of energy produced.
However, critics argue that the industry still relies heavily on fossil fuels, which continue to contribute to greenhouse gas emissions and environmental degradation.
The ongoing use of natural gas, alongside the growing adoption of renewable energy sources, highlights the dual nature of Bitcoin mining’s energy consumption.
The Cambridge report notes that fossil fuels now account for 47.6% of Bitcoin mining’s total energy usage, with natural gas at 38.2%, coal at 8.9%, and oil at 0.5%.
While these figures suggest a decline in coal usage, the overall reliance on fossil fuels remains a contentious issue within the broader debate about Bitcoin mining’s environmental impact.
Emissions and hardware efficiency
While the use of renewable energy sources is on the rise, Bitcoin mining still has a significant carbon footprint.
The Cambridge Centre for Alternative Finance estimates that Bitcoin mining produces 39.8 megatonnes of carbon dioxide (CO2) emissions annually. This represents a 24% improvement in carbon efficiency compared to the previous year.
Despite these improvements in efficiency, the sheer scale of Bitcoin mining’s energy consumption means that it remains a substantial contributor to global greenhouse gas emissions.
In addition to carbon emissions, the mining industry also faces challenges related to electronic waste. The study found that approximately 86.9% of decommissioned mining hardware is either resold, repurposed, or recycled, helping to reduce the environmental impact of electronic waste.
However, Bitcoin mining is still expected to produce around 2.3 kilotonnes of electronic waste in 2024, which remains a pressing issue for the industry.
One of the key factors driving the ongoing environmental impact of Bitcoin mining is the high electricity consumption associated with mining operations.
Electricity remains the primary cost driver for miners, making up more than 80% of operational expenses. The median electricity cost reported by mining firms is $45 per megawatt-hour (MWh), with total costs reaching an average of $55.5/MWh.
Bitcoin mining’s growth
North America continues to dominate the global Bitcoin mining industry, with the United States accounting for 75.4% of the Bitcoin network’s total hashrate. Canada follows with 7.1%.
This dominance has been driven in part by the availability of cheap electricity in both countries, as well as the regulatory environment in the US, which has become increasingly friendly to cryptocurrency mining.
The dominance of North American mining operations is further supported by advancements in hardware and the availability of mining equipment.
According to the Cambridge report, the majority of mining firms, including publicly listed companies such as Bitfarms, CleanSpark, Hut 8, IREN, MARA, and Riot, are based in North America.
These companies represent nearly 48% of global Bitcoin mining by hashrate, demonstrating the region’s critical role in the sector’s development.
In terms of overall market growth, Bitcoin mining’s electricity consumption continues to rise, with a reported year-on-year increase of 17%.
As global electricity demand continues to surge, Bitcoin miners are increasingly looking for ways to mitigate their environmental footprint while also managing the high costs associated with energy consumption.
The volatility of Bitcoin prices also remains a concern, with many miners focusing on strategies to hedge against price fluctuations and mitigate risk.
Regulatory challenges to Bitcoin mining
Despite these advancements in sustainability and energy efficiency, Bitcoin miners are facing growing regulatory pressures.
A significant concern for the industry is the rising cost of energy, with 57% of respondents to the Cambridge survey expressing concerns about high electricity prices.
Moreover, 47% of mining firms are worried about the potential for stricter regulations at both local and federal levels. The introduction of new energy tariffs and policies that target Bitcoin mining operations could add to these financial pressures.
One of the key challenges facing Bitcoin miners is the supply chain issues related to mining hardware. Many miners rely on equipment sourced from Southeast Asia, including countries like Thailand, Malaysia, and Indonesia.
However, recent trade policies in the US have imposed tariffs of up to 36% on imported mining machines, which has raised concerns about the cost of new hardware.
The US government has temporarily paused these tariffs for 90 days, but the long-term effects on the supply chain remain uncertain.
In response to these challenges, the US Commerce Department has launched an investment accelerator to help Bitcoin miners. This initiative aims to support the growth of the industry by making it easier for miners to access the energy they need.
As Secretary Howard Lutnick stated, “We’re going to make it so that if you want to mine Bitcoin and you find the right place to do it, you can build your own power plant next to it”.
The government’s support could help miners navigate some of the challenges they face, but the long-term future of Bitcoin mining will depend on continued technological advancements and a shift towards cleaner energy sources.
