In a new report filed by Greenpeace, the climate group called for Wall Street accountability in crypto mining, and it correlated bitcoin mining to excessive global energy usage.
Greenpeace claimed that Bitcoin (BTC) mining has evolved into a significant industry dominated by traditional financial companies that are buying up and operating large-scale facilities, using lots of energy.
In 2023, global Bitcoin mining used approximately 121 TWh of electricity, comparable to the entire gold mining industry or a country like Poland. This resulted in significant carbon emissions, the report contended, as these facilities consume as much electricity as a small city.
“Despite the guise of Bitcoin being independent from the mainstream financial system, the industry is deeply connected to traditional finance for Bitcoin mining companies to access capital and to enable trading and investing in Bitcoin,” the report read.
TradFi support of BTC mining
The report highlighted traditional financial institutions’ substantial role in supporting Bitcoin mining. These companies rely on capital from banks, asset managers, insurers, and venture capital firms to build and maintain their operations.
The report identified the top five financiers of carbon pollution from Bitcoin mining in 2022: Trinity Capital, Stone Ridge Holdings, BlackRock, Vanguard, and MassMutual. Together, they were responsible for over 1.7 million metric tons of CO2 emissions, equivalent to the annual electricity use of 335,000 American homes.
Bitcoin mining companies Marathon Digital, Hut 8, Bitfarms, Riot Platforms, and Core Scientific generated emissions comparable to 11 gas-fired power plants.
Bitcoin’s environmental impact
The report pointed out that Bitcoin’s environmental impact compared to its market value is similar to beef production and gasoline from crude oil. It also mentioned that Bitcoin’s environmental effects have worsened as the industry has expanded.
Bitcoin uses a lot of electricity due to its Proof-of-Work (PoW) consensus mechanism. Unlike traditional currencies, cryptocurrencies operate through a decentralized digital ledger. Bitcoin’s PoW requires miners to solve complex algorithms that use significant electricity.
“Energy-hungry miners are straining electrical grids across the U.S. and world…draining electricity when more is needed to power electrification of housing, transportation, and manufacturing to meet global climate targets,” the report read.
Financial responsibility
The report contended that Wall Street, traditional financers, and banks are more responsible for the alleged energy disparity than Bitcoin miners themselves. Greenpeace contended that institutions encourage (through tax breaks and bank benefits) miners to use more energy.
The report contended that miners depend on backing from banks and asset managers, and Wall Street and the banking industry are responding favorably, seeking their portion of the rewards.
Solutions
Greenpeace argued that financial institutions should be more transparent about their environmental incentives to reduce the negative impact of these incentives.
“Bitcoin miners need to disclose data about their energy use and carbon emissions,” the report read. “Financial companies also need to report on the financed and facilitated emissions associated with their investments, loans, and underwriting services for Bitcoin mining companies.”
They called for Bitcoin miners to pay a fair share for their electricity use, strain on electrical grids, greenhouse gas emissions, water consumption, 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.
