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Sunday, September 10, 2023

Increasing BTC Energy Consumption Increases Regulatory Risks

Early in 2022, European Union rejected a proposal to ban BTC mining. Fears of more stringent regulations could be in place soon to neutralize the effect of crypto mining on the environment.

BTC Energy Consumption

Year on Year energy consumption of Bitcoin has seen a sharp increase of 41 percent. Despite the use of more energy-efficient ways and mix. This gives rise to fears of more regulations coming to slow down BTC crypto mining.

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This data is from reports of Quarter 3, 2022 of the Bitcoin Mining Council. The world’s top 51 companies are represented by Bitcoin Mining Council.

Of the global production of energy, Bitcoin Mining was found to be consuming 0.16 percent of it, which is a little less than computer games’ energy consumption. BMC considers the report on this energy consumption as inconsequential.

BTC mining’s contribution to the world’s carbon emissions is roughly 0.10 percent, which the council says is negligible.

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Despite lower production of blocks and price showing a downward trend, the quarter 3 2022 report shows an increased energy consumption as the result of increased network hash rate. The hash rate jump is around 8.34 percent in quarter 3 2022. When compared year on year it is around 73 percent.

Glassnode, a data analytic firm, is of the opinion that there could be two possible reasons for the high rise in the hash rate, firstly, it could possibly be owing to highly efficient mining equipment coming online or, secondly, be the result of miners with healthier balance sheet having majority share of the hash power network.

Environmentalists are ramping up pressure on miners of BTC. They claim that the consumption of energy by the miners will hurt the environment. They have even started a campaign, which so far has garnered around 1100 followers.

The European Union has released a document detailing an action Plan to be followed.

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