Bitcoin
Bitcoin Mining Companies Are Hiding Energy Data, Wall Street Is Responsible
In a new report presented by Greenpeace, the climate group called for holding Wall Street accountable in crypto mining and correlated bitcoin mining with excessive global energy use.
Green Peace claimed that Bitcoin (Bitcoin) Mining has evolved into a significant industry dominated by traditional financial companies that are purchasing and operating large-scale, energy-intensive facilities.
In 2023, globally Bitcoin mining used approximately 121 TWh of electricity, a value comparable to the entire gold mining industry or a country like Poland. This has resulted in significant carbon emissions, the report states, as these facilities consume as much electricity as a small city.
“Although Bitcoin is independent of the conventional financial system, the industry is deeply connected to traditional finance so that Bitcoin mining companies have access to capital and enable trading and investing in Bitcoin,” the report said.
TradFi support for BTC mining
The report highlighted the substantial role of traditional financial institutions in supporting Bitcoin mining. These companies depend on capital from banks, asset managers, insurance companies and venture capital firms to build and maintain their operations.
The report identified the top five financiers of carbon pollution from Bitcoin mining in 2022: Trinity Capital, Stone Ridge Holdings, BlackRock, Vanguard and MassMutual. Together, they were responsible for more than 1.7 million metric tons of CO2 emissions, equivalent to the annual electricity consumption of 335,000 American homes.
Bitcoin mining companies Marathon Digital, Hut 8, Bitfarms, Riot Platforms and Core Scientific have generated emissions comparable to 11 gas-fired power plants.
The environmental impact of Bitcoin
The report pointed out that Bitcoin’s environmental impact compared to its market value is similar to that of producing beef and gasoline from crude oil. It also mentioned that Bitcoin’s environmental effects have worsened as the industry has expanded.
Bitcoin uses a lot of electricity due to its Proof of Work (PoW) consensus mechanism. Unlike traditional currencies, cryptocurrencies operate through a decentralized digital ledger. Bitcoin PoW requires miners to solve complex algorithms that use significant electricity.
“Energy-hungry miners are overloading electrical grids in the US and around the world… draining electricity when more is needed to power the electrification of housing, transportation and production to meet global climate goals,” the report reads.
Financial responsibility
The report stated that Wall Street, traditional financiers and banks are more responsible for the alleged energy disparity than Bitcoin miners themselves. Greenpeace argued that institutions encourage (through tax incentives and bank benefits) miners to use more energy.
The report states that miners depend on support from banks and asset managers, and Wall Street and the banking sector are responding favorably, seeking their share of the rewards.
Solutions
Greenpeace argued that financial institutions should be more transparent about their environmental incentives to reduce the negative impact of these incentives.
“Bitcoin miners need to disclose data about their energy use and carbon emissions,” the report says. “Financial companies also need to report funded and facilitated issuances associated with their investments, loans and underwriting services for Bitcoin mining companies.”
They called on Bitcoin miners to pay a fair share for electricity usage, pressure on power grids, greenhouse gas emissions, water consumption and disruption to nearby communities. They suggested implementing a different consensus mechanism for Bitcoin to address the current energy-intensive proof-of-work model and ultimately resolve Bitcoin’s environmental impact.