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22 March 2021

Blomberg: Bitcoin Rally Stirs BofA Alarm on ‘Enormous’ Surge in Energy Use

Coin accounts for 0.4% of global energy consumption, BofA says Consumption may rival that of some of the largest countries

Bitcoin’s massive rally over the past year means it’s only getting worse for the environment.

The energy used by the network of computers that power the digital coin is comparable to that of many developed countries and rivals the emissions from major fossil-fuel users and producers such as American Airlines Group Inc. and ConocoPhillips, according to a report by Bank of America Corp. The level of emissions, which have risen alongside a spike in Bitcoin’s price, have grown by more than 40 million tons in the past two years. And when the digital asset is trading around $50,000 -- which it’s done for much of this year -- it uses about 0.4% of global energy consumption.

More worrisome, according to the report titled “Bitcoin’s dirty little secrets,” is that rising prices may mean Bitcoin’s energy consumption will soon rival that of some of the largest countries in the world.

“What I’m concerned about is the pace of growth in the demand for energy,” Francisco Blanch, head of commodities and derivatives research at Bank of America and lead author of the report, said in an interview. “The rate of change is enormous -- nothing is growing at this pace in the energy world.”

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Bank of America

Bitcoin has skyrocketed into the limelight during the Covid-19 pandemic amid unprecedented fiscal and monetary stimulus that’s been a boon to more-speculative parts of the financial markets. The world’s largest cryptocurrency surged almost 10-fold in the past year. That’s meant greater energy use, too.

Because the coin’s supply is limited, any excess demand could push prices even higher. Rising prices encourage more so-called mining activity and may consequently push CO2 emissions up even more, according to Bank of America.

relates to Bitcoin Rally Stirs BofA Alarm on ‘Enormous’ Surge in Energy Use

Bank of America

Bitcoin transactions are processed by miners -- crypto slang for companies that operate a vast array of computers. Miners compete to confirm transactions and get new coins awarded in return -- but they require huge amounts of energy to run. Buoyed by increased competition, only a handful of such firms -- most China-based -- controlled about 50% of all the computing power on the network, Bloomberg News reported last year....

more at Bloomberg

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