The energy mix of Bitcoin mining has taken a new turn, with nuclear and gas energy rapidly taking over as sources of energy for the mining of BTC.
The major problem in the cryptocurrency industry is the amount of energy Bitcoin consumes in mining. This energy consumption negatively impacts the environment as Bitcoin has become one of the most significant global pollution sources.
Despite the mounting solutions, the rate of energy usage in the cryptocurrency mining sector remains high. If care is not taken, the government could move for a ban on Bitcoin mining due to a lack of a solution to its energy consumption problems. Hence, mining companies seek other organic energy sources to serve as additional energy sources.
What is Bitcoin Mining?
Bitcoin mining is leveraging a global system of computers operating the Bitcoin code to ensure transactions are legitimate and added to the Blockchain. New Bitcoin coins are generated through the mining process. It consists of the verification of new transactions, digital validation of transactions, and solving complex cryptographic hash puzzles. Thus, miners receive Bitcoin as a reward.
On record, Bitcoin mining consumes more energy than most countries worldwide. It is estimated that one Bitcoin transaction takes 1,449 kWh to round off, which is the equivalent of approximately 50 days of power compared to an average US household. According to statistics, Bitcoin uses more than 150 trillion watt-hours of electricity yearly, which is more than some nations use. This amount of energy produced results in yearly carbon dioxide emissions of around 65 megatons.
The growth of Nuclear and Gas energy in BTC mining
Following new statistics, the most popular energy sources for Bitcoin mining are natural gas and nuclear power.
With the Cambridge Centre for Alternative Finance (CCAF) updating their Bitcoin mining electricity consumption index, records show that approximately 62% of the mix of the electricity produced by Bitcoin in January 2022 came from fossil fuels like coal and natural gas. The remaining 38% of the overall energy mix used in bitcoin mining is derived from other energy sources.
Further studies showed that in 2022, Hydropower is the second-highest energy source for Bitcoin mining, after coal, as coal made up around 37% of the energy mix while hydropower made up 15%.
With this new data, BTC’s reliance on coal and hydropower has decreased over the years, as both did better in 2020, with 34 percent of electricity coming from hydropower and 40 percent from coal.
On the other hand, over the past two years, nuclear and natural gas energy use has significantly increased in the Bitcoin mining industry. The percentage of gas climbed from almost 13% in 2020 to 23% in 2021, while the share of nuclear energy increased from 4% in 2021 to over 9% in 2022 in the BTC electricity mix.
The effect of power change on BTC energy consumption
According to Cambridge experts, Chinese miners are to blame for the BTC energy consumption mix’s volatility in 2020 and 2021. The Chinese government shut down many hydroelectric-powered mining companies in 2021, which reduced the hydropower contribution to BTC mining. The ban led to the migration of miners to other countries, increasing BTC’s environmental footprint.
The BTC energy mix varies from country to country, as some use sustainable energy while others use fossil fuels. 38% of the electricity in the US is generated by natural gas. Nuclear power makes up 19% of the total. Hence, analysts claim that the rise in nuclear and natural gas energy use in BTC mining is a result of the shift in mining power to the United States.
The BTC energy mix varies from country to country, as some use sustainable energy while others use fossil fuels. 38% of the electricity in the US is generated by natural gas. Nuclear power makes up 19% of the total. Hence, analysts claim that the rise in nuclear and natural gas energy use in BTC mining is a result of the shift in mining power to the United States.
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