As the most cost-efficient machines will generate the biggest profits, agents are incentivized not just to use the most efficient hardware but also to seek out the cheapest electricity. According to Coinshares, one popular area for such cheap electricity is the province of Sichuan in China. It is suggested that 48% of the global mining capcity is now situated here.

The southwest of China is capable of producing large amounts of hydropower while local demand is substantially lower. Unfortunately, “China’s grid infrastructure is currently a bottleneck for renewable power generation.”Because of insufficient grid penetration and a lack of high-quality grid infrastructure, the power export capacity of the region is also limited. This leaves the Sichuan and Yunnan provinces with an abundance of hydropower, which lures in energy-hungry and polluting industries trying to take advantage of the low rates. Bitcoin mining is one these industries.

Unlike the power demand of Bitcoin mining machines, which is consistent all year long, the production of hydropower is subject to seasonality. In an extensive report, China Water Risk (CWR) explains that “hydroelectricity cannot be generated year-round” because of “variations in water availability through rain/floods/droughts.”Production of hydropower is high in the wet season during the summer months and low in the dry season during the winter months. As a result, seasonal variability in hydropower is already higher than 30% and expected to increase further because of climate change.

In Sichuan, specifically, “the average power generation capacity during the wet season is three times that of the dry season.”These fluctuations in hydroelectricity generation need to be balanced out with other types of electricity. CWR adds that this “is usually coal,” and as a consequence, this renewable option is “not technically 100% green.” It should thus be no surprise that the carbon emission factor of purchased electricity in Sichuan ranges from 265 to 579 g CO/kWh, depending on the chosen method.This is more comparable to the GHG emissions of generating electricity from natural gas (469 g CO/kWh) than it is to the GHG emissions of generating hydropower (4 g CO/kWh).

The former reveals the challenges in uniting “green” renewable energy with Bitcoin mining. Miners may indeed be able to take advantage of (temporary) excesses of hydroelectricity, but they effectively increase the baseload demand on a grid throughout the year. This demand has to be met with energy from alternative sources, when seasonality causes production of this renewable energy to fall. In the worst-case scenario, it presents an incentive for the construction of new coal-fired power stations to fulfil this purpose.

Environmental Impact beyond Energy Use

The previously described challenge is not the only challenge in trying to address Bitcoin’s sustainability problem with renewable energy. One thing that renewable energy cannot solve at all for Bitcoin’s environmental footprint is what happens to the mining machines once they reach the end of their economic lifetime. For ASIC mining machines, there is no purpose beyond the singular task they were created to do, meaning they immediately become electronic waste (e-waste) afterward. To estimate the total e-waste potential of the Bitcoin network, we need to determine first the quantity of mining equipment in the network and, second, the rate at which this equipment becomes obsolete.

Table 1 Examples of Bitcoin ASIC Miner Machine Types Machine Producer Hashrate (TH/s) Power Efficiency (J/TH) Net Weight (kg) Weight/Hashrate (kg/TH/s) Released Antminer S15 Bitmain 28 57 7 0.25 December 2018 Antminer S9 Bitmain 14 98 4.2 0.30 June 2016 Antminer T9 Bitmain 12.5 126 4.2 0.34 January 2017 Antminer T9+ Bitmain 10.5 127 4.2 0.40 January 2018 Antminer S7 Bitmain 4.73 273 4.5 0.95 September 2015 Antminer S5 Bitmain 1.155 510 2.5 2.16 December 2014 Antminer S4 Bitmain 2 690 7.3 3.65 September 2014 AvalonMiner 821 Canaan 11 109 4.7 0.43 February 2018 AvalonMiner 761 Canaan 8.8 150 5.8 0.66 July 2017 AvalonMiner 741 Canaan 7.3 160 4.3 0.59 April 2017 Bitfury B8 Bitfury 47 130 37 0.79 December 2017 Source: Bitmain, Bitfury, and Canaan. As mentioned before, there is no way to determine the exact composition of the Bitcoin network. Since we can estimate the total computational power in the network, we can use this to derive a quantitative estimate of the total mining equipment. We can observe that at its peak (in October 2018), the Bitcoin network was estimated to process around 54.7 exahashes per second ( Figure 1 ). We can subsequently establish that it would require at least 3.91 million Antminer S9 machines, with an advertised output of 14 terahashes per second, to produce that amount of computational power. The combined weight of these machines would amount to 16,442 metric tons. This number represents the minimal quantity of mining equipment in the network, as the Antminer S9 had the least amount of weight per unit of computational power at this time ( Table 1 ).

With the release of the new (more cost efficient) Antminer S15 in December 2018, we can expect all of this equipment to become obsolete in the very near future. The recent drop in total network computational power ( Figure 2 A), following a decreasing Bitcoin price and mining machine profitability ( Figure 2 B), suggests that this process is well underway. From October to December 2018, the total computational power in the network decreased by 19.9 exahashes per second, meaning at least 5,973 metric tons of mining equipment were removed from the network. Although this does not mean they were immediately disposed.

12 Koomey J.

Berard S.

Sanchez M.

Wong H. Implications of historical trends in the electrical efficiency of computing. In general, we can expect mining equipment to become obsolete in roughly 1.5 years, which would follow from Koomey’s law and the observation that only the most cost-efficient machines can remain economically viable for mining. Koomey et al. observed that “the electrical efficiency of computing (the number of computations that can be completed per kilowatt-hour of electricity)” has “doubled about every 1.5 years” over a period of 65 years.The developments in Bitcoin ASIC mining equipment have easily kept up with this pace ( Table 1 ).

13 Baldé C.P.

Forti V.

Gray V.

Kuehr R.

Stegmann P. The Global E-waste Monitor – 2017. If Bitcoin cycles through 16,442 metric tons of mining equipment every 1.5 years, the annualized e-waste generation would amount to 10,948 metric tons. This amount of e-waste is comparable to the total e-waste generated by a country like Luxembourg (12 kt).Moreover, it amounts to a staggering average footprint of 134.5 g per transaction processed on the Bitcoin network in 2018 (81.4 million). This is as heavy as two “C” size batteries (130 g) or four standard 60 W light bulbs (136 g).

7 VISA Sustainability & the Environment. 14 Kontzer T. Inside Visa’s Data Center. 15 VISA

Annual Report 2018. We do not know the amount of e-waste generated by the banking sector, but we can find that a financial institution like VISA has a significantly lower e-waste output. VISA does not disclose its exact e-waste production but provides that it has two data centers for processing its transactions.The largest one consists of seven independent physical pods, containing “376 servers, 277 switches, 85 routers, and 42 firewalls” each.We can assume that the total equipment in each of these pods weighs around 40 metric tons (putting the weight of a single server over 100 kg). The combined weight for all pods would then amount to 280 metric tons. Even though the second data center is only half the size of the first one, we assume an equal amount of equipment. This brings the total equipment estimate for both of VISA’s data centers to 560 metric tons. If we then assume this equipment would be replaced in full every year, the average e-waste footprint per processed transaction (124.3 billion in total for 2018) would still only amount to 0.0045 g.