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Bitcoin Mining Companies Hide Energy Data, Wall Street Is Responsible
In a new report unveiled by Greenpeace, the climate group called for accountability from Wall Street in cryptocurrency mining and linked bitcoin mining to excessive global energy use.
Green peace claimed that Bitcoin (Bitcoin) mining has evolved into a major industry dominated by traditional financial companies that purchase and operate large-scale, energy-intensive facilities.
In 2023, global Bitcoin mining it used around 121 TWh of electricity, comparable to the entire gold mining industry or a country like Poland. This has resulted in significant carbon emissions, the report claims, as these facilities consume as much electricity as a small city.
“Despite Bitcoin’s appearance as independent from the traditional financial system, the sector is deeply connected to traditional finance to allow Bitcoin mining companies to access capital and enable trading and investment in Bitcoin,” the report reads.
TradFi support of BTC mining
The report highlighted the substantial role of traditional financial institutions in supporting Bitcoin mining. These companies rely on capital from banks, asset managers, insurers and venture capital firms to build and maintain their businesses.
The report identified the top five funders of carbon pollution from Bitcoin mining in 2022: Trinity Capital, Stone Ridge Holdings, BlackRock, Vanguard and MassMutual. Together, they are responsible for more than 1.7 million 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 generated emissions comparable to those of 11 gas-fired power plants.
The environmental impact of Bitcoin
The report highlights that Bitcoin’s environmental impact relative to its market value is similar to that of producing beef and gasoline from crude oil. He also said that Bitcoin’s environmental effects have worsened as the industry has expanded.
Bitcoin uses a lot of electricity because of 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 a significant amount of electricity.
“Energy-hungry miners are straining power grids in the United States and around the world…draining electricity when it is needed most to power the electrification of homes, transportation and manufacturing to meet global climate goals” , the report reads.
Financial responsibility
The report claims that Wall Street, traditional lenders and banks are more responsible for the alleged energy disparity than Bitcoin miners themselves. Greenpeace claims that institutions encourage (through tax breaks and banking benefits) miners to use more energy.
The report claims that miners are dependent on support from banks and asset managers, and Wall Street and the banking sector are responding favorably, seeking their share of the reward.
Solutions
Greenpeace argued that financial institutions should be more transparent about their environmental incentives to reduce the negative impact of those incentives.
“Bitcoin miners must disclose data on their energy consumption and carbon emissions,” the report reads. “Financial companies must also report on financed and concessional issuances associated with their investments, loans and underwriting services for Bitcoin mining companies.”
They asked Bitcoin miners to pay a fair share for their electricity use, strain on power grids, greenhouse gas emissions, water use 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.