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In a recent report, Greenpeace has called for increased accountability from Wall Street in the realm of crypto mining, highlighting the significant energy usage associated with Bitcoin mining.
Greenpeace asserted that Bitcoin (BTC) mining has grown into a major industry, largely controlled by traditional financial firms that are operating extensive facilities, consuming substantial amounts of energy.
In 2023, global Bitcoin mining consumed around 121 TWh of electricity, comparable to the entire gold mining industry or a country like Poland. This high energy consumption has led to considerable carbon emissions, with these facilities using 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 stated.
Traditional Finance Support of BTC Mining
The report emphasized the significant role traditional financial institutions play in supporting Bitcoin mining. These companies depend on capital from banks, asset managers, insurers, and venture capital firms to establish and sustain their operations.
Greenpeace 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 compared Bitcoin’s environmental impact to its market value, drawing parallels with beef production and gasoline from crude oil. It noted that Bitcoin’s environmental effects have worsened as the industry has grown.
Bitcoin’s energy consumption is largely 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, which consumes 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 stated.
Financial Responsibility
The report argued that Wall Street, traditional financers, and banks bear more responsibility for the energy disparity than Bitcoin miners themselves. Greenpeace claimed that institutions encourage miners to use more energy through tax breaks and bank benefits.
The report suggested miners rely heavily on backing from banks and asset managers. Wall Street and the banking industry are responding favorably, seeking their portion of the rewards.
Possible Solutions
Greenpeace proposed that financial institutions should be more transparent about their environmental incentives to mitigate negative impacts. They called for Bitcoin miners to disclose data regarding their energy use and carbon emissions.
“Financial companies also need to report on the financed and facilitated emissions associated with their investments, loans, and underwriting services for Bitcoin mining companies,” the report added.
Greenpeace recommended that Bitcoin miners should pay a fair share for their electricity use, grid strain, greenhouse gas emissions, water consumption, and community disruptions. They suggested adopting a different consensus mechanism to address the current energy-intensive Proof-of-Work model and ultimately reduce Bitcoin’s environmental impact.
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