UN Report Reveals Strong Correlation Between Bitcoin Price and Mining Energy Usage

A recent study conducted by the United Nations has shed light on a significant correlation between the price of Bitcoin and the energy consumption of its mining operations. UN scientists examined the activities of 76 Bitcoin mining nations during the period from 2020 to 2021, revealing a direct link between the cryptocurrency’s price and the energy required for its mining.

During this period, the global Bitcoin mining network devoured an astonishing 173.42 terawatt-hours of electricity. It’s important to note that this timeframe coincided with a bullish phase in the crypto market, during which Bitcoin reached its all-time high, soaring to $69,000. The UN report underscored the striking relationship, stating:

“A 400% increase in Bitcoin’s price from 2021 to 2022 triggered a 140% increase in the energy consumption of the worldwide Bitcoin mining network.”

One noteworthy point in the report was the significant reliance on fossil energy sources, which accounted for 67% of the electricity used for Bitcoin mining. Nevertheless, proactive steps have been taken by crypto industry players to reduce this dependence on non-renewable energy sources.

Hydropower emerged as a key contributor, satisfying over 16% of the total electricity demand of the global Bitcoin mining network. Additionally, nuclear, solar, and wind energy sources provided 9%, 2%, and 5% of the energy needs, respectively.

Critics within the crypto community have questioned the UN report for referencing the Mora et al. 2018 paper, which was criticized for overestimating the carbon emissions from Bitcoin mining rigs due to the inclusion of unprofitable mining rigs in their analysis.

According to the UN report, the top 10 Bitcoin mining nations at the time were China, the United States, Kazakhstan, Russia, Malaysia, Canada, Germany, Iran, Ireland, and Singapore. These countries were collectively responsible for 92% to 94% of the global carbon, water, and land footprint associated with Bitcoin.

As global efforts intensify to transition to greener energy alternatives to meet electricity demands, the carbon footprint of Bitcoin and the broader crypto ecosystem is expected to decrease.

Notably, companies like Genesis Digital Assets Limited are opening data centers powered by renewable energy sources, furthering the adoption of sustainable practices in the mining industry. In Sweden, for example, a new data center running 1,900 Bitcoin mining machines has been established, taking advantage of the country’s surplus of renewable energy.

Christian Anders, founder of BT.CX, emphasized that Bitcoin mining can be cost-effective in regions with surplus energy and negative energy prices, such as Sweden, Finland, and Norway, which primarily rely on renewable hydropower.

In tandem with these efforts, Bitcoin mining equipment manufacturers are actively developing energy-efficient hardware, and discussions at industry events like the World Digital Mining Summit have revolved around strategies to reduce the carbon footprint of the crypto ecosystem. As the world becomes increasingly environmentally conscious, the crypto industry is adapting to align with more sustainable practices.

By Urik

My professional background is in public relations and I am the founder of Cryptochating. My journey into blockchain technology started four years ago, and I haven't looked back since then. The future of decentralized technology is incredibly fascinating to me, and I am passionate about communicating how it will change the world.

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