Why Bitcoin Miners May Flee China in 3 Years With 0 Profit
Based on a Bitcoin blockchain carbon emission model (BBCE), a new study has put a timeline to when the profit of Bitcoin miners – majority of which are predominant in China – would likely drop to zero.
The authors of the paper which has been published in the broad open-access journal, Nature Communications, set an April 2024 date as when Bitcoin miners in China will gradually stop mining in the country and relocate their operation elsewhere. They estimate that while up to 13 million metric tons of CO2 emissions can be attributed to the Bitcoin blockchain between January 2016 and June 2018, their projection is that the annual energy consumption of the Bitcoin blockchain in China would peak in 2024 at 296.59 Twh to generate 130.50 million metric tons of carbon emission correspondingly if no policy interventions were made.
“However, without appropriate interventions and feasible policies, the intensive Bitcoin blockchain operation in China can quickly grow as a threat that could potentially undermine the emission reduction effort taking place in the country,” their paper states, adding that the pattern will become a non-negligible barrier against the sustainability efforts of China.
Bitcoin blockchain’s unexpected behaviors
The researchers, who are mainly from the University of Chinese Academy of Sciences, present a BBCE model scenario results to indicate that the energy consumed and the carbon emissions generated by Bitcoin industry operation are simulated to grow continuously as long as mining Bitcoin maintains its profitability in China. On the other hand, their BBCE simulation claims miners will gradually stop mining in China or relocate to elsewhere when the mining profit turns negative.
Actually, the researchers set out to quantify the current and future carbon emission patterns of Bitcoin blockchain operation in China under different carbon policies hence their development of the BBCE based on system dynamics modeling after detecting “several unexpected behaviors of the Bitcoin blockchain”.
Such factors include the attractive financial incentive of Bitcoin mining which they say has caused an arms race in dedicated mining hardware with moves from basic Central Processing Unit (CPU) on general-purpose computers to the Graphic Processing Unit (GPU) and then the Application-Specific Integrated Circuits (ASICs).
Bitcoin mining problem for China
The growing energy consumption and the environmental impacts of the Bitcoin blockchain have posed problems for many countries, especially for China. Due to the proximity to manufacturers of specialized hardware and access to cheap electricity, the majority of the mining process has been conducted in China as miners in the country account for more than 75% of the Bitcoin network’s hashing power.
Considering that the entire relocation process does not occur immediately, they see the carbon emission pattern of the Bitcoin industry as likely to become an increasing threat to China’s greenhouse emission reduction target as one of the largest energy consuming countries on the planet and a key signatory of the Paris Agreement.
Under the Paris Agreement, China is devoted to cut down 60% of the carbon emission per GDP by 2030 based on that of 2005. However, according to the simulation results of the BBCE model, we find that the carbon emission pattern of Bitcoin blockchain will become a potential barrier against the emission reduction target of China.