September 30, 2022
Greg Cipolaro

Research Weekly - A Deeper Look at Bitcoin Mining’s Impact on the Environment


  • An authoritative figure provides an update on Bitcoin mining’s impact on the environment
  • Bitcoin’s greenhouse gas (GHG) emissions have declined with a reduction in electricity consumption
  • Sustainable sources account for nearly 38% of Bitcoin mining's energy mix
  • Bitcoin mining accounts for just 0.10% of global annual GHGs, far less than one might imagine

An Authority Provides an Update on Bitcoin’s Impact on the Environment

This week, the Cambridge Centre for Alternative Finance (CCAF), a research center at the University of Cambridge Judge Business School, published “A Deep Dive into Bitcoin’s Environmental Impact.” We have long held the belief that the CCAF has published the most thorough, thoughtful, and objective analysis of Bitcoin’s energy consumption and its impact on the environment. Given the importance of this topic for investors, regulators, legislators, and frankly the citizens of the planet, we are going to devote the entirety of this week’s research note to the findings.

Measuring Environmental Impact is Not Straightforward

Readers should appreciate the fact that estimating Bitcoin’s impact on the environment is not a simple exercise. There are multiple layers of data acquisition, estimation, and analysis to go from the first step, reading Bitcoin’s difficulty, to the final step, estimating greenhouse gas (GHG) emissions. The CCAF has three methodologies that underpin their electricity consumption, mining distribution, and GHG production estimates that are worth reviewing.

Important Takeaways

Annual GHG Emissions Have Declined

One of the most important takeaways from the CCAF analysis, which is one of the only continuously updated datasets on Bitcoin’s energy consumption and GHG emissions, is that annualized GHG emissions are down significantly from their peak. The CCAF estimates that Bitcoin mining is presently responsible for 47.7 MtCO2e annually, down 37.2% from the spring 2021 highs. As we will explore in the next section, most of that reduction is due to a decline in electricity consumption rather than other factors such as a shift to greener energy sources. As we explore later on, the Bitcoin network is powered by 37.8% sustainable energy.

GHG Emissions Fall with Declining Energy Consumption

The primary reason for the decline in GHG emissions is the reduction in monthly electricity demands of bitcoin mining over the past year. We have written about this at length in this newsletter; to recap: bitcoin mining has become a less profitable business over the recent months because of lower bitcoin prices, higher energy costs, rising network hash rate, and higher capital costs. These economic factors, coupled with service disruptions, have resulted in the crimping of electricity demand to power mining rigs. Embedded in the CCAF's energy mix assumptions are no changes from the last observed data point from January 2022, which will likely get revisited as new information is made available.

Near Record Hash Rate with Lower Electricity Consumption Implies Increased Efficiency

While electricity consumption has decreased, the network hash rate, the collective computational effort of all the network’s miners, remains at an all-time high. This combination of reduced electricity consumption and high hash rate means that the network has become more efficient. It is likely that miners have found it economical to replace old, inefficient mining rigs with new, more efficient mining rigs.

It’s important to understand that metrics such as network efficiency, which we define as the average monthly network hash rate divided by monthly electricity consumption (EH/s /TWh), are best used as short-term indicators. Because of secular improvements in the efficiency of semiconductor chip manufacturing and therefore mining rigs, the network should continually get more efficient on a hash per energy consumption basis, keeping all else equal. Said differently, a hash produced by a miner 10 years ago has a very different economic value than one produced today, even keeping other factors such as total difficulty and price the same. While the industry tends to focus on network hash rate to make inferences about the security of the Bitcoin network and protection against events like 51% attacks, electricity consumption and the installed mining rig base, a measure outside the scope of this analysis, are more important.

Sustainable Energy Accounts for Nearly 38% of Bitcoin Mining’s Energy Mix

The CCAF estimates that 37.6% of Bitcoin mining’s energy mix comes from sustainable sources, solar, wind, hydro, nuclear, and other renewables, while the remainder, 62.4%, comes from fossil fuels. Nuclear alone accounts for 11.4% of the energy mix. As a caveat, the mix is last measured as of January 2022, so it is a bit backward looking. That being said, the biggest change in the composure of Bitcoin mining’s energy mix occurred in the summer of 2021 when China banned mining. The resulting migration of hash rate from China to the US changed the seasonal nature of Bitcoin’s energy mix, which used to shift heavily to hydro during the wet summer months in China. There should be less variability and seasonality associated with Bitcoin’s energy mix going forward.

Bitcoin Accounts for 0.10% of Global GHG Emissions

The 47.7 MtCO2e of annual GHG emissions from Bitcoin mining presently estimated by the CCAF represents a small fraction of annual GHGs emitted worldwide (49,758 MtCO2e in 2019), just 0.10%. The White House Office of Science and Technology Policy report published a few weeks back put the figure at 0.2% - 0.3% of global GHGs for all proof of work mining, including Bitcoin. While the number is not zero, it is significantly less than the sensational media headlines would lead investors to believe.

In conclusion, we encourage investors to read the entire update from the CCAF here as well as access their tools and resources on the matter here. Environmental impact is an important discussion item for both investors and policymakers and will likely continue to take center stage. We urge investors to be informed on the matter and think the work done by the CCAF is among the most credible.

Market Update

It was another tough week in financial markets as macroeconomic and interest rate fears continue to grip investors. Given that, we thought it was important to see that despite all the talk of higher equity market correlations, bitcoin was up slightly on the week, +0.5%, while equity markets continue to fall. The S&P 500 was down 3.1% and the Nasdaq Composite down 3.0%. Bonds again proved not to be a safe haven asset, with Investment Grade Corporate Bonds down 2.3%, High Yield Corporate Bonds down 1.8%, and Long-Term US Treasuries down 1.4%. It may be a surprise to investors, but year to date, the iShares 20+ Year Treasury Bond ETF (TLT) is down almost as much as the Nasdaq Composite (CCMP), -29.0% vs -30.9%. Gold fell again this week, down 1.0% as real rates rose and inflation expectations declined.

Important News This Week


Hello Taro: Building the (Tap)Root of the World's Financial Network with Bitcoin - Lightning Labs

Developers Can Now Issue Assets Like Stablecoins on Bitcoin - Bitcoin Magazine


Voyager Completes Successful Auction and Announces Agreement for FTX to Acquire Its Assets - Voyager

Crypto Tycoon’s Bitdeer Debuts Fund Targeting Distressed Miners - Bloomberg

Gemini and Betterment Partner to Bring Diversified Crypto Portfolios to Investors - Gemini


MicroStrategy Looks to Hire Software Engineer for Building Bitcoin Lightning Network Infrastructure - Coindesk

Warner Music Group and OpenSea Join Forces to Expand Web3 Opportunities for Artists - Warner Music

Compute North Files for Chapter 11 Bankruptcy and 363 Asset Sale – What Now? - Hashrate Index

Strike Raises $80 Million Funding Round to Revolutionize Payments for Merchants and Consumers Globally - Strike

Celsius Network CEO Submits Letter of Resignation - Celsius

Regulation and Taxation:

Europe AML rules could implicate DeFi, DAOs and NFTs - The Block

Tether's Former Auditor Fined $1M by SEC for Sloppy Accounting - Coindesk

Upcoming Events

October 7th – United States Non-Farm Payrolls

October 13th – Consumer Price Index

October 14th –The Atlanta Bitcoin Conference 2022

Nov 2nd – Next FOMC rate decision

Thanks for joining us again this week. Please reach out with any questions or comments.

The NYDIG Team

This report has been prepared solely for informational purposes and does not represent investment advice or provide an opinion regarding the fairness of any transaction to any and all parties nor does it constitute an offer, solicitation or a recommendation to buy or sell any particular security or instrument or to adopt any investment strategy. Charts and graphs provided herein are for illustrative purposes only. This report does not represent valuation judgments with respect to any financial instrument, issuer, security or sector that may be described or referenced herein and does not represent a formal or official view of New York Digital Investment Group or its affiliates (collectively NYDIG).

It should not be assumed that NYDIG will make investment recommendations in the future that are consistent with the views expressed herein, or use any or all of the techniques or methods of analysis described herein. NYDIG may have positions (long or short) or engage in securities transactions that are not consistent with the information and views expressed in this report.

The information provided herein is valid only for the purpose stated herein and as of the date hereof (or such other date as may be indicated herein) and no undertaking has been made to update the information, which may be superseded by subsequent market events or for other reasons. The information in this report may contain forward-looking statements regarding future events, targets or expectations. NYDIG neither assumes any duty to nor undertakes to update any forward-looking statements. There is no assurance that any forward-looking events or targets will be achieved, and actual outcomes may be significantly different from those shown herein. The information in this report, including statements concerning financial market trends, is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons.

Information furnished by others, upon which all or portions of this report are based, are from sources believed to be reliable. However, NYDIG makes no representation as to the accuracy, adequacy or completeness of such information and has accepted the information without further verification. No warranty is given as to the accuracy, adequacy or completeness of such information. No responsibility is taken for changes in market conditions or laws or regulations and no obligation is assumed to revise this report to reflect changes, events or conditions that occur subsequent to the date hereof.

Nothing contained herein constitutes investment, legal, tax or other advice nor is it to be relied on in making an investment or other decision. Legal advice can only be provided by legal counsel. NYDIG shall have no liability to any third party in respect of this report or any actions taken or decisions made as a consequence of the information set forth herein. By accessing this report, the recipient acknowledges its understanding and acceptance of the foregoing terms.


Bitcoin for All.
Insights for You.

Subscribe now to learn what’s driving bitcoin markets, track significant regulatory developments, and get the data that deserves your attention.