Bitcoin’s Carbon Footprint Revisited: Proof of Work Mining for Renewable Energy Expansion

Challenges, EISSN 2078-1547, Published by MDPI

23 Pages Posted: 3 Feb 2023 Last revised: 19 Jul 2023

See all articles by Juan Ignacio Ibañez

Juan Ignacio Ibañez

UCL Centre for Blockchain Technologies; The DLT Science Foundation

Alexander Freier

Catholic University of Córdoba (UCC)

Date Written: July 19, 2023

Abstract

While blockchain and distributed ledger technology offer immense potential, they have been criticized due to the energy-intensive nature of the proof of work consensus algorithm, particularly in the context of Bitcoin mining. We systematically explore the state of the art regarding the relationship between Bitcoin mining and grid decarbonization. We specifically focus on the role of flexible load response through proof of work mining as a potential contributor to renewable energy penetration and net decarbonization of the energy grid. The existing literature has not comprehensively examined this area, leading to contested views. We address the gap, analyzing the capabilities and limitations of Bitcoin mining in providing flexible load response services. Our findings show that renewable-based mining could potentially drive a net-decarbonizing effect on energy grids, although key adaptations in mining practices are needed to fully realize this potential. Overall, the paper suggests a re-evaluation of the environmental impact of Bitcoin mining, highlighting its potential role as a facilitator for renewable energy expansion, and decarbonization more broadly.

Keywords: Blockchain, Carbon Footprint, Decarbonization, Ancillary Services, Flexible Load Response, Sustainability, Renewable Energy Sources

JEL Classification: Q42, Q49, Q54, Q56, Q01

Suggested Citation

Ibañez, Juan Ignacio and Freier, Alexander, Bitcoin’s Carbon Footprint Revisited: Proof of Work Mining for Renewable Energy Expansion (July 19, 2023). Challenges, EISSN 2078-1547, Published by MDPI, Available at SSRN: https://ssrn.com/abstract=4347220 or http://dx.doi.org/10.2139/ssrn.4347220

Juan Ignacio Ibañez (Contact Author)

UCL Centre for Blockchain Technologies ( email )

UCL CBT UCL Computer Science
Malet Place London WC
London, London WC1E 6BT
United Kingdom

The DLT Science Foundation ( email )

United Kingdom

Alexander Freier

Catholic University of Córdoba (UCC) ( email )

Argentina

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
794
Abstract Views
4,631
Rank
58,319
PlumX Metrics