Bitcoin mining companies are hiding energy data, Wall Street is responsible

In a new report by Greenpeace, the climate group called for Wall Street accountability on crypto mining and linked bitcoin mining to excessive global energy use.

Greenpeace claimed that Bitcoin (BTC) mining has become a major industry dominated by traditional financial companies that buy and operate large-scale facilities and use a lot 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. The report claimed that since these facilities consume as much electricity as a small city, this leads to significant carbon emissions.

“Despite Bitcoin’s appearance of independence from the mainstream financial system, the sector is deeply interconnected with traditional finance to enable Bitcoin mining companies to access capital and enable Bitcoin trading and investment,” the report said.

TradFi support for BTC mining

The report highlighted the important role of traditional financial institutions in supporting Bitcoin mining. These companies rely on capital from banks, asset managers, insurers and venture capital firms to establish and maintain their operations.

The report identified the five largest 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, the equivalent of the annual electricity use of 335,000 American homes.

Bitcoin mining companies Marathon Digital, Hut 8, Bitfarms, Riot Platforms and Core Scientific produced emissions equivalent to those of 11 gas-fired power plants.

Bitcoin’s environmental impact

The report noted that Bitcoin’s environmental impact compared to its market value is similar to gasoline produced from beef production and crude oil. It was also mentioned that Bitcoin’s environmental impacts are worsening as the industry expands.

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 amounts of electricity.

“Energy-hungry miners are straining power grids in the United States and around the world…consuming electricity when more is needed for the electrification of housing, transportation, and manufacturing to meet global climate goals,” the report said.

financial responsibility

The report suggested that Wall Street, traditional financiers and banks are more responsible for the alleged energy inequality than Bitcoin miners. Greenpeace argued that institutions (through tax breaks and bank benefits) were encouraging miners to use more energy.

The report suggested that miners depend on the support of banks and asset managers, and that Wall Street and the banking industry are responding positively and trying to get their share of the rewards.

Answers

Greenpeace has argued that financial institutions should be more transparent about environmental incentives to reduce the negative impact of these incentives.

“Bitcoin miners are required to disclose data on their energy use and carbon emissions,” the report said. “Financial companies are also required to report financed and facilitated emissions associated with their investments, loans and insurance services to Bitcoin mining companies.”

They called for Bitcoin miners to pay a fair share for their electricity use, strains on power grids, greenhouse gas emissions, water consumption and degradation of nearby communities. They proposed implementing a different consensus mechanism for Bitcoin to address the current energy-intensive proof-of-work model and ultimately solve Bitcoin’s environmental impact.