Written by Hazel J. Greene, Senior Analyst

Bitcoin mining has been at the center of debates due to its significant energy consumption. While proponents argue that it offers various climate benefits and can contribute to grid stability, mitigate methane emissions, and expand renewable energy resources, a recent study by MIT researchers sheds light on the extent of Bitcoin mining’s energy consumption and the sources of this energy.

The MIT researchers acknowledge that Bitcoin mining holds potential climate benefits, but stress the need for closer scrutiny. One significant advantage is its contribution to grid stability and resilience, as demonstrated during the winter storm Elliott in December 2022. Bitcoin miners were able to curtail as much as 100 Exahashes per second (EH/s), equivalent to 38% of the total Bitcoin network hashrate on that day. This event supports the argument that Bitcoin mining can provide grid operators with a resource that can rapidly adjust its power usage, offering stability during high-demand or stressful periods for the grid.

Another potential benefit lies in the mitigation of methane emissions. Bitcoin mining utilizes wasted flare gas in electrical generators, potentially reducing carbon dioxide equivalent (CO2e) emissions by up to 25% compared to open flares. However, recent studies indicate a lower flare efficiency than initially assumed, resulting in a smaller reduction in methane emissions than anticipated.

Additionally, Bitcoin mining could offer a solution to the issue of orphaned and unplugged oil and gas wells, which contribute to CO2 emissions. By operating near these wells, miners can convert wasted energy into electricity, generate revenue, and fund well-sealing efforts, thereby mitigating the climate impact.

Lastly, Bitcoin mining could facilitate the expansion of renewable energy resources. The researchers note that mining in remote locations can help address challenges associated with integrating intermittent renewable energy sources into power grids. By providing a stable and predictable demand for renewable electricity, the production costs of renewable energy may be driven down, encouraging further expansion.

Despite the potential benefits, the MIT researchers highlight the substantial energy demand of Bitcoin mining. As of March 25th, 2023, Bitcoin miners’ power demand amounted to 15.4 gigawatts (GW). This high energy consumption raises concerns about the environmental impact.

The study challenges the notion that the majority of BTC mining is fueled by renewable sources, revealing that the carbon intensity of electricity consumed by miners in the United States is nearly equivalent to the U.S. grid average carbon intensity. Furthermore, the study unveils the magnitude of carbon emissions caused by a subset of publicly listed mining companies in the U.S., surpassing the carbon emissions of an entire state.

The MIT researchers’ study provides a comprehensive analysis of the benefits and drawbacks associated with Bitcoin mining. While potential climate benefits such as grid stability, methane emissions reduction, well-sealing, and renewable energy expansion exist, the study emphasizes the need for more research and scrutiny.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The cryptocurrency market is highly volatile, and readers should conduct thorough research before making any investment decisions.