KPMG Report Reveals Bitcoin's Green Side
In a new report, accounting firm KPMG sheds light on Bitcoin's positive environmental impact.
KPMG's recent groundbreaking report challenges the conventional belief that Bitcoin harms the environment. In a striking departure from common perceptions, the multinational accounting firm's analysis of Bitcoin's ESG framework (Environmental, Social, and Governance) reveals Bitcoin to be an ally in the face of a changing climate. Despite its energy consumption, Bitcoin showcases many surprising environmental benefits. Let's dive into the key highlights of the report.
The authors recognize how trivial criticisms aimed at Bitcoin’s energy consumption have been:
“Bitcoin consumes approximately 110 terawatt hours of energy per year, roughly 0.55% of global electricity use which is equivalent to the amount of energy required to run tumble dryers. One would have expected much more electricity use given the years of criticism Bitcoin has received due to its energy consumption.”
-KPMG
Finally, Bitcoin’s energy consumption has not been drastically overstated and trivial comparisons to other countries energy use are not included in the report.
Bitcoin miners are incentivized to adopt renewable energy sources:
“As electricity is the largest ongoing input cost affecting operations, miners are constantly searching for the lowest cost sources of electricity, which is often tied to underutilized hydro, wind, or solar.”
-KPMG
This observation aligns perfectly with the data. Bitcoin’s energy mix is already powered by a majority of sustainable energy, made up of renewables as well as wasted energy sources such as flared gas or methane leaking from landfills. Additionally, Bitcoin's innovative utilization of wasted energy aids in offsetting carbon emissions that would otherwise be released into the atmosphere.
Bitcoin miners can help balance electrical grids:
“In addition to being a buyer of last resort when demand is low, Bitcoin miners have the opportunity to serve as flexible load through participation in demand response programs that help balance electrical grids. This is accomplished by the interruptible nature of mining operations in that they can curtail their power usage at a moment’s notice in order to give that power back to the grid in the event that demand exceeds available supply.”
-KPMG
Bitcoin’s ability to balance electrical grids can help stabilize electricity prices in the area and in many cases even result in lower electricity prices paid for consumers.
Bitcoin makes renewable energy more economical and can incentivize the buildout of additional renewable energy capacity:
“This ability for Bitcoin miners to dynamically flex their power consumption during periods of excess supply and/or low market demand can provide additional incentive to the buildout of additional renewable energy capacity. These non-core load centers improve the economics of renewable energy projects by allowing their developers to facilitate further expansion of their operations.”
-KPMG
Since Bitcoin compensates you for electricity, renewable energy operators can recover their capital costs much faster, leading to the additional buildout of renewables, a necessary precursor to a carbon neutral future. Furthermore, Bitcoin makes renewable energy much more economical because operators can get paid even when there is low demand for electricity. For example, when the wind is blowing at night, or from excess hydro during wet seasons.
Heat emitted from Bitcoin mining rigs can be recycled and used in many creative ways:
“Some Bitcoin miners have begun to recycle the heat for other purposes such as heating homes, commercial buildings, greenhouses, and even swimming pools.”
-KPMG
Repurposing heat from Bitcoin miners can lead to reduced greenhouse gas emissions elsewhere, as it lowers the energy demand for heating purposes.
Bitcoin miners can play a key role in reducing emissions from methane:
“Bitcoin miners are identifying new and creative ways to source their power which has also resulted in the reduction of methane that enters the atmosphere.”
-KPMG
Methane is among the most potent greenhouse gases, with a global warming potential 84 times higher than that of carbon dioxide over a 20-year timeframe. Given that methane is accountable for over 30% of global warming to date, Bitcoin miners discovering inventive ways to harness stranded or wasted methane can serve as a strong lever in curbing additional emissions from entering the atmosphere. In fact, in Canada and the USA alone, so much gas is being flared directly into the atmosphere that it could more than power the entire Bitcoin network.
Bitcoin is driving electrification in rural Africa by co-locating with microgrids:
“Bitcoin miners are able to co-locate within these microgrids and allow the operators to monetize what would have otherwise been wasted energy. This in turn has provided more consistent and less expensive electricity to residents by increasing the useful load factor on the local grid and decreasing the cost per kWh by increasing total sales.”
-KPMG
Sub-Saharan Africa is one of the least electrified regions of the world. Because Bitcoin miners can make energy sources more economical, it is allowing for the electrification of these rural areas through microgrids. These areas often did not have electricity or faced very expensive power costs prior to Bitcoin miners co-locating with them.
Bitcoin is an ally in the transition to renewable energy:
“Between Bitcoin’s flexible demand load, ability to co-locate next to renewable energy sources, use of underutilized energy supply, and its ability to assist in reducing emissions, Bitcoin miners can be a useful ally in the transition to more renewable energy sources and reduce emissions, despite its significant energy consumption.”
-KPMG
We will need to massively overbuild our renewable energy infrastructure if we stand a chance at decarbonizing the economy. Bitcoin miners are an ally in this transition to renewable energy and may be the key to achieving our goals at the speed and scale necessary.
Final Thoughts
All-in-all, this report is a breath of fresh air for an industry plagued with misconceptions and uninformed conclusions. The observations found in this report echo many of the points individuals in the Bitcoin community have been trying to communicate to policymakers and regulators for years. The ability of Bitcoin to incentivize renewable energy, offset carbon emissions, and balance electrical grids conclusively showcases its potential as a powerful tool in our effort to decarbonize and fight climate change. All that is required now is informed action from the public to help maximize Bitcoin’s potential as a driver for positive change.
If you want to read the full report you can find it here.
