A new report by the United Nations (UN) reveals that the price of Bitcoin (BTC) and the energy required for its mining are highly correlated. The report also warns that Bitcoin mining poses significant environmental challenges and calls for more sustainable practices in the crypto industry.
Bitcoin mining is the process of validating transactions and creating new coins on the Bitcoin network. It requires a lot of computing power and electricity, which are often sourced from fossil fuels. According to the UN report, the global Bitcoin mining network consumed 173.42 terawatt-hours of electricity in 2020–2021, equivalent to the annual energy use of Argentina.
The UN report found that the price of Bitcoin and the energy use of mining are positively correlated, meaning that as the price goes up, so does the energy consumption. The report stated: “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.” This is because higher prices attract more miners and incentivize them to use more powerful and energy-intensive hardware.
However, not all Bitcoin mining is harmful to the environment. Some miners have adopted greener sources of energy, such as hydropower, nuclear, solar and wind. The UN report estimated that these sources accounted for 32% of the total electricity demand of the global Bitcoin mining network in 2020–2021. Moreover, some Bitcoin mining equipment manufacturers have introduced more efficient and less carbon-intensive hardware, such as Bitmain’s Antminer S21.