Current and Future Implications of Cryptocurrency Mining on Energy and Climate Change /

Abstract

Blockchain technology has been adopted at a significant pace in the recent years. It’s a peer-to-peer technology and anyone is free to join this network. The major blockchain technologies for instance, bitcoin consume massive amount of energy during its mining and transaction processes and hence overburdening the power sector. Furthermore, due to these processes significant amount of carbon emissions are emitted which are known to contribute towards climate change. Consequently, they make it difficult to achieve sustainable development goals to combat climate change. In this study the energy consumption, carbon emissions, and carbon credits for United States, China, India, and Pakistan have been calculated. Furthermore, the hash rate, energy consumption, and carbon emissions for Pakistan have been forecasted to check the future cryptomining potential in Pakistan. To calculate the energy consumption, and energy required to produce one USD worth of bitcoin is derived utilizing the methodology from available literature. Furthermore, the carbon footprint and carbon credits are calculated using the Department of Environment, Food and Rural Affairs (DEFRA) methodology. For forecasting hash rate, energy consumption, and carbon emissions, Machine Learning Convolutional Neutral Network (CNN) model has been used. After Chinese government crackdown, United States has become the country housing most of miners. Meanwhile, India and Pakistan have a least contribution compared to other crypto mining countries due to various reasons including unregulated government policies. The hash rate from Pakistan is expected to remain lower until December 2024. Overall, most of emissions due to crypto mining are emitted from United States and more energy is required to mine a coin in United States than in Pakistan. Hence, mining can be more beneficial in Pakistan but due to unclear policies, limited resources and technologies it cannot prosper. Overall, findings will assist in determining the adoptability of cryptocurrency and how the energy sector can be reshaped, and its carbon footprint be reduced.