A Credit Suisse report downplayed fears that the growth of the bitcoin mining industry would initiate an “environmental armageddon.”
Bitcoin Mining Not an ‘Environmental Armageddon’
The emergence of bitcoin as an economic force has had a correlative effect on the bitcoin mining industry, as increased profitability has attracted more miners to the ecosystem.
This increased hashpower has come at the price of increased electricity consumption, provoking consternation among environmental activists and leading some critics to warn that bitcoin could cause a global energy crisis.
However, a new report from Credit Suisse Group throws shade on those apocalyptic predictions.
Last Week, Morgan Stanley predicted that cryptocurrency miners could consume as much as 140 terawatt-hours of electricity this year, which equates to about 0.6 percent of global demand. Citing this report, Credit Suisse said that bitcoin mining is unlikely to cause an “environmental Armageddon” — at least anytime soon.
“This is a far cry from the power and environmental Armageddon that some have feared,” the Credit Suisse analysts, led by Michael Weinstein, wrote in this week’s report, according to Bloomberg.
They added that it is a mistake to project miners’ power consumption lineally, as the industry will likely develop hardware and practices that are more energy-efficient in a bid to gain a competitive advantage. The report noted that this phenomenon occurred among both marijuana growers and data center operators during high-growth periods for these industries.
$5 Billion Annual Revenue Opportunity
The report predicts bitcoin mining is “very unlikely” to approach 350 terawatt-hours of energy consumption a year, a mark that qualifies an industry as an “ultra-high-end” electricity consumer.
Rather, the analysts anticipate that the mining industry could present electricity producers with a $5 billion “global annual revenue opportunity,” which is a far cry from the $6 trillion worth of energy consumed globally each year.
“This is a small portion of global electric usage and an even smaller portion of total global energy expenditures,” the report concluded.
Miners Seek Out Surplus Electricity
Moreover, apocalyptics predictions about mining’s electricity consumption ignore that the industry naturally gravitates toward locations with low utility rates, which tend to have low-cost energy due to an excess supply.
Canadian utility Hydro-Quebec, for instance, is actively courting bitcoin miners in the wake of China’s apparent desire to reduce the amount of electricity available to domestic miners.
This concentration of cryptocurrency mining operations in regions with surplus electricity will further mitigate the potential environmental impact of this burgeoning industry.
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Last modified: March 4, 2021 5:03 PM