The paper deals with the cryptoeconomy impact on the environment. The term 'cryptoeconomy' is used for designating the emerging industry around cryptocurrencies and blockchain. Cryptocurrency mining consumes a lot of electricity. As of September 2019, the estimated annual miners' electricity consumption was 78.93 TWh. According to the upper boundary estimation, miners' carbon dioxide emissions were about 80.43 million tons of CO2, which corresponds to 0.24% of the world's total carbon dioxide emissions. The aim of this paper is to develop bitcoin mining carbon footprint estimation methodology. The suggested method is based on the miners' geographical distribution obtained by analyzing the traffic of mining pools login pages. The methodology includes 1) assessment of the miners' geographical distribution; 2) estimation of the miners' carbon dioxide emissions by regions. According to the proposed methodology, miners' carbon dioxide emissions are about 44.12 million tons per year (0.13% of the world's total emissions), which is two times lower than the upper boundary estimate.
At the current stage of cryptoeconomy development, the following market segments can be identified: exchange and brokerage services, payments, storage and custody (storage of cryptoassets as a service), network consensus services (mining equipment production and operation), infrastructure (design, development, and maintenance of the codebases of cryptoasset networks and related applications), alternative fundraising, banking, and insurance.
This paper focuses on digital mining which provides network consensus services and ensures the integrity of cryptocurrencies’ public ledgers, facilitates transactions and prevents double-spending.
In 2018, the Cambridge Center for Alternative Finance conducted a survey of miners’ performance indicators. 22 companies and 35 individual miners from different regions took part in it. According to the survey the indicators were distributed as follows (Table 1).
Table 1 shows that the most important indicators for miners are the availability of electricity and its price. This is due to the fact that mining consumes a lot of electricity.
Assuming that electricity for bitcoin mining is generated at the coal-fired power plants only, and knowing its electricity consumption, one can estimate carbon dioxide emissions by the upper bound3:
mCO2 = φ * Eestimated, mCO2 − carbon dioxide emissions, kg φ − air pollution by power generation, kg / kWh Eestimated − annual electricity consumption, kWh
Cambridge Bitcoin Energy Consumption Index
At the same time, electricity produced by a coal-fired power plant has a significantly
different environmental footprint comparing to electricity generated by a solar park,
for example. Recent studies have shown that the share of renewable energy used by
miners is increasing in the overall structure of energy consumption. However,
estimates vary significantly – from 20%
Therefore, a clarification of the methodology of estimation of carbon dioxide emissions caused by bitcoin mining is essential.
The assessment of the carbon footprint caused by bitcoin mining has been done in
However, since shodan.io provides information about one thousand devices only, this source cannot be considered as a reliable. The analysis of blockcypher data showed that more than 70% of IPs come from Amazon, which characterizes the blockcypher’s servers rather than the actual miners’ distribution. Therefore, only slushpool and btc.com were used for the methodology development. But these services provide aggregate statistics, therefore there is a need for further improvements.
The aim of this paper is the development of a methodology of estimation of carbon dioxide emissions caused by bitcoin mining, which takes into account the miners’ regional distribution. The methodology includes 1) assessment of the miners’ geographical distribution; 2) estimation of the miners’ carbon dioxide emissions by regions.
The proposed approach is based on the traffic analysis of the mining pools login pages. It was assumed that: 1) miners from different regions use login pages in different regions around the world in the same way; 2) traffic measurement systems determine the real location of those who are using VPNs, proxies, and other tools that allow hiding and faking locations.
In order to get miners’ regional distribution, consensus-estimate of 3 different internet traffic measurement services were used: SimilarWeb4, Alexa5, SemRush6. The following login pages have been taken into consideration (Table 2). 4 https://www.similarweb.com 5 https://www.alexa.com/siteinfo 6 https://www.semrush.com
The pools, considered in detail, cover 80% of the global hash rate. Table 3 shows an example of slushpool.com data.
Stoll
Given the adjusted data for btc.com and slushpool, the resulting statistics are as follows (Table 5).
The obtained statistics on the miner’s geographical distribution (Table 5) were used to estimate carbon dioxide emissions of bitcoin mining (Table 6). The values in the “kgCO2/kWh” column of Table 6 express the average emission factor for generating 1 kWh of electricity in the given region which was obtained from the “IEA World Energy Outlook 2017 Annex A Tables for Scenario Projections”. The values of the column “kWh per year” in Table 6 are calculated as follows: the overall electricity consumption estimate (78.93 TWh per year) is multiplied by the share of the region. The share of the region is given in Table 5 (in the column “Total”). 78.93 TWh per year 44.12 million tons of CO2
According to the proposed methodology, carbon dioxide emissions are about 44.12 million tons per year (0.13% of global emissions), which is two times lower than the upper boundary estimate.
However, the proposed approach overestimates the proportion of regions with a greater concentration of small miners and underestimates the proportion of regions where large miners are predominant. Having data directly from mining pools would solve this issue. Currently, work in this area is ongoing. 8 The value for China has been downgraded due to the large share of hydropower used for mining in Sichuan (Stoll et al, 2019)
The paper presents bitcoin mining carbon footprint estimation methodology based on the miners’ geographical distribution. The methodology includes 1) assessment of the miners’ geographical distribution by analyzing the traffic of mining pools login pages; 2) estimation of the miners’ carbon dioxide emissions by regions.
According to the proposed methodology, miners’ carbon dioxide emissions are about 44.12 million tons per year which make 0.13% of the world’s total emissions. The obtained estimates of electricity consumption and carbon dioxide emissions are approximately twice as high as the results of the Stoll’s assessment, partly it could be explained by the significant increase in the bitcoin network hash rate since the publication of his study.
At the same time, miners search for cheap electricity worldwide (e.g. hydropower that occurs in some regions during floods). This leads to reducing carbon dioxide emissions. On the other hand, countries, which produce fossil-fuel electricity (such as Kazakhstan and Iran) are gaining popularity among the miners.
Anyway, increasing electricity consumption may challenge the UN Sustainable Development Goals. The issue of miners’ electricity consumption and the corresponding environmental impact should be discussed with policymakers, industry participants and the general public. Retrieved from