Crypto mining requires energy to power the computers that verify and record cryptocurrency transactions. In some cases this energy may come from the burning of coal or fossil fuels, a source of carbon emissions, which are driving climate change. In contrast, green crypto mining draws power from renewable energy sources such as solar power, hydroelectric power, and nuclear energy that emit little or no carbon.
What is the primary source of energy for crypto mining?
Entrepreneurs and leaders from Elon Musk to Janet Yellen have voiced concerns over the sustainability of crypto mining because it is an carbon-intensive process requiring a lot of power. Scientists agree that carbon emissions from the burning of fossil fuels are driving catastrophic and unprecedented climate change at a global scale.
However, it is a misconception that fossil fuels are the only source of energy for crypto mining. In fact, a 2020 study [PDF] by the Cambridge Centre for Alternative Finance (CCAF) at the University of Cambridge Judge Business School found that the crypto miners around the world they surveyed sourced their energy from renewable energy sources. The bitcoin miners they surveyed reported that 29% of their mining is powered by renewables. Many crypto miners are turning to renewable energy and using it to increase their profits.
How can the sustainability of crypto mining be calculated?
You might think the sustainability of crypto mining could be calculated by looking at emissions, but this can be difficult to calculate. It is difficult to ascertain the carbon emissions created by crypto mining without knowing the precise energy mix used to power it in the first place. Think of this like knowing the supply chain of crypto mining. For example, one unit of hydro energy will have much less of an environmental impact than the same unit of coal-powered energy.
In an article [PDF] published in 2021 the journal Nature Communications, researchers found inducing the industry to source its energy from clean or renewable energy sources could be a more effective way for government policy makers to limit carbon emissions than taxing emissions after they are already created.
When can crypto mining be considered green or sustainable?
To understand whether crypto mining is green or sustainable, it is first important to understand how a crypto mining company describes its energy sourcing practices. Some ways to communicate sustainability involve claiming crypto mining is “zero carbon” or “carbon neutral” but these are not the same thing.
Zero-carbon means that no carbon emissions were produced during the creation of a product or a service. Carbon neutral involves removing as much carbon from the atmosphere as was created, after it is created. This may be through carbon credits or offsets, i.e., payments to support activities that support the removal of carbon from the atmosphere, such as preserving or planting forests. However, the idea that carbon neutral is sustainable has been criticized because carbon credit/offset activities may not permanently reduce carbon. If carbon credits are used to protect one forested area, deforestation may increase in another area.
At launch, TeraWulf will mine sustainable bitcoin at an industrial scale using over 90% zero-carbon energy. These sources include nuclear energy, hydro-electric power, and solar. We plan to reach 100% zero-carbon emissions by 2030.
