[Paper Review] Bitcoin's future carbon footprint

Shize Qin, Lena Klaaßen+3 more|arXiv (Cornell University)|Nov 5, 2020

Energy, Environment, and Transportation Policies17 references4 citations

TL;DR

This paper develops a framework to project Bitcoin's long-term electricity consumption and carbon footprint under different market and energy decarbonization scenarios. It finds that Bitcoin's annual electricity use could rise from 60 to 400 TWh by 2100, with cumulative emissions reaching 2 gigatons under business-as-usual energy pathways—equivalent to 7% of global 2019 emissions—unless decarbonization accelerates.

ABSTRACT

The carbon footprint of Bitcoin has drawn wide attention, but Bitcoin's long-term impact on the climate remains uncertain. Here we present a framework to overcome uncertainties in previous estimates and project Bitcoin's electricity consumption and carbon footprint in the long term. If we assume Bitcoin's market capitalization grows in line with the one of gold, we find that the annual electricity consumption of Bitcoin may increase from 60 to 400 TWh between 2020 and 2100. The future carbon footprint of Bitcoin strongly depends on the decarbonization pathway of the electricity sector. If the electricity sector achieves carbon neutrality by 2050, Bitcoin's carbon footprint has peaked already. However, in the business-as-usual scenario, emissions sum up to 2 gigatons until 2100, an amount comparable to 7% of global emissions in 2019. The Bitcoin price spike at the end of 2020 shows, however, that progressive development of market capitalization could yield an electricity consumption of more than 100 TWh already in 2021, and lead to cumulative emissions of over 5 gigatons by 2100. Therefore, we also discuss policy instruments to reduce Bitcoin's future carbon footprint.

Motivation & Objective

• To address uncertainties in prior estimates of Bitcoin’s carbon footprint by developing a forward-looking framework.
• To project long-term electricity consumption and carbon emissions of Bitcoin based on realistic market growth assumptions.
• To assess how decarbonization of the electricity sector influences Bitcoin’s climate impact.
• To evaluate policy instruments that could mitigate Bitcoin’s future carbon footprint.

Proposed method

• The authors model Bitcoin’s electricity consumption using a dynamic framework based on market capitalization growth, assuming it follows gold’s historical trajectory.
• They link electricity consumption to carbon emissions using region-specific electricity grid decarbonization pathways.
• The model incorporates two contrasting energy scenarios: business-as-usual (BAU) and carbon-neutral by 2050.
• Electricity demand is projected using a cost-minimization model for mining, calibrated to historical data and market trends.
• The framework integrates price volatility, particularly the 2020–2021 price spike, to assess extreme growth scenarios.
• Policy instruments are evaluated through sensitivity analysis on emission reduction potential.

Experimental results

Research questions

• RQ1 How will Bitcoin’s electricity consumption evolve from 2020 to 2100 under a gold-like market cap growth trajectory?
• RQ2 What is the projected carbon footprint of Bitcoin under different decarbonization pathways of the global electricity sector?
• RQ3 How do recent price surges, such as the 2020–2021 spike, affect long-term emission projections?
• RQ4 What are the potential policy levers to reduce Bitcoin’s future carbon emissions?
• RQ5 When does Bitcoin’s carbon footprint peak under different energy transition scenarios?

Key findings

• Bitcoin’s annual electricity consumption could rise from 60 TWh in 2020 to 400 TWh by 2100 if its market cap grows in line with gold’s historical trend.
• Under a business-as-usual electricity decarbonization scenario, cumulative CO2 emissions from Bitcoin would reach 2 gigatons by 2100, equivalent to 7% of global 2019 emissions.
• If the electricity sector achieves carbon neutrality by 2050, Bitcoin’s carbon footprint would peak and begin declining, indicating a critical window for policy action.
• A sharp price surge at the end of 2020 could lead to electricity consumption exceeding 100 TWh in 2021 and cumulative emissions surpassing 5 gigatons by 2100.
• The study identifies that early decarbonization of the power grid is essential to prevent Bitcoin from becoming a major source of future emissions.