The Bitcoin network, with its continually increasing hash rate, has seen a corresponding decrease in its emissions intensity, according to recent reports from Bloomberg. Analyst Jamie Coutts explained that this trend is contrary to most other industries and could potentially trigger the next wave of institutional investment.
Data cited by Coutts on Monday revealed that the sustainable energy mix for Bitcoin has been steadily rising since 2021 and now exceeds 50%. This increase in sustainable energy use has resulted in a slower growth of emissions relative to the network's expansion. Coutts noted that the evolving relationship between Bitcoin network growth and the global push to transition from fossil fuels could "catalyze a wave of institutional and even sovereign investment capital."
Energy constitutes over 50% of mining's operational costs, providing an incentive to procure the cheapest energy sources. This has contributed to the network's rising hash rate while simultaneously reducing the industry's emissions or carbon intensity.
On Saturday, it was reported that the next generation of Bitcoin miners is focusing on alternative energy sources for efficiency. However, there has been ongoing debate about the percentage of sustainable energy used in Bitcoin mining. Cambridge University's model, which hasn't been updated since January 2022, suggests that mining from sustainable energy sources is just 37.6%.
Contrarily, climate technology venture investor and activist Daniel Batten argues that this figure is actually above 50%. He indicated that the Cambridge model does not consider off-grid mining and methane mitigation in its calculations. Earlier this year, Batten reported that Bitcoin mining emissions intensity had reached its lowest-ever level. He also predicted that the Bitcoin network will become carbon neutral by December 2024.
The analysis from Bloomberg also noted a significant drop in Bitcoin's energy usage since China and Kazakhstan imposed mining bans. The report highlighted a decline in Bitcoin energy intensity from 600 to 295.5 grams of CO2 per KWH, leading to a more decentralized sector. According to the data, Bitcoin emissions have plummeted 75% per dollar in its market capitalization, even though the price of BTC is 60% below its $63,000 all-time high.
The rising cost of mining Bitcoin has pushed miners to seek cheaper forms of energy, reducing reliance on fossil fuels and paving the way for a new economy for institutional investment. This shift has led to the emergence of green crypto mines powered by solar or wind energy, fostering an ideal energy transition as billions continue to flow into the ecosystem.
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