Butterfill (CoinShare): Bitcoin Mining Can Accelerate the Energy Transition

There is still much debate about the environmental and energy impact of bitcoin mining, the process by which new bitcoins are created and transactions are validated on the network and which is based on blockchain technology. According to James Butterfill , Head of Research at CoinShares, a European investment company specializing in digital assets and cryptocurrencies, the issue is more complex: mining can in fact contribute to reducing other environmental impacts and making renewable energy more efficient and sustainable also from an economic point of view.

We report his analysis below

Bitcoin miners have every interest in using the cheapest electricity available: this often leads them to exploit so-called “ stranded energy” sources, that is, energy that cannot be easily fed into the grid. Many of these sources come from renewable energy projects in remote areas, thus contributing to a significant alignment of the sector with the demands of the energy transition, in a sustainable perspective.

Today, in fact, over 56% of the energy used for Bitcoin mining comes from sustainable sources : a percentage that exceeds that of the financial sector, which stands at around 40% for a total of approximately 400 grams of CO2 per kilowatt hour (while, for example, the gold mining industry emits around 700).

According to the University of Cambridge, contrary to popular belief, the overall electricity consumption of the Bitcoin network has remained relatively stable from year to year , despite the rapid increase in computational power ( hashrate ); this is mainly due to technological progress, which has improved the efficiency of mining.

Since 2021, Bitcoin mining’s emissions intensity has dropped from nearly 600 grams of CO2 per kilowatt hour to just 250 grams — thanks to both increased efficiency and a higher share of renewable energy, from 33% to 56%. A notable example of this is Texas, where using excess energy for mining has reduced costs and increased profitability for energy providers.

This development has triggered a renewable energy boom: wind capacity has increased by 50% to 44 gigawatts, while solar capacity has grown by 800% to 22 gigawatts. Texas is now the U.S. leader in renewable energy .

Gas flaring —the burning of excess natural gas—is a growing environmental problem, as highlighted in a recent BBC report. The practice, which is especially prevalent in drilling operations in the Gulf of Mexico, poses a significant threat to air pollution. Although flaring is preferable to venting (direct release of gas into the atmosphere), as it reduces CO2 equivalent emissions by 92% according to Mesa Solutions, its widespread use remains a concern: an image from SkyTruth clearly shows the global scale of the problem, with yellow dots indicating active flaring sites around the world.

According to the World Bank, approximately 139 billion cubic meters of natural gas were burned in 2022 —equivalent to the entire gas consumption of Central and South America.

Currently, traditional methane flaring emits about 59 grams of CO2 equivalent per 1,000 BTUs (British Thermal Units), according to Mesa Solutions. Using a modern turbine generator drops that figure to 22 grams per 1,000 BTUs—a 63 percent reduction, making it three times less polluting than a gasoline-powered car.

The main problem with flaring is that the energy cannot be stored or transported cost-effectively ; therefore, it is simply burned in remote areas , far from power grids or gas pipelines. This is where Bitcoin mining comes in , as it can play a key role in reducing emissions from flaring by utilizing that energy and reducing waste. Mining hardware and generators can be housed in shipping containers and operated directly in these isolated locations, without the need for pre-existing energy infrastructure .

Flaring also often leads to methane slip , the incomplete combustion of methane that ends up being released into the atmosphere—a problem exacerbated by wind. Turbines, on the other hand, are much more efficient and have much lower methane slip rates, significantly reducing the risk of these emissions.

Currently, gas flaring contributes about 406 million tons of annual CO2 emissions ; if that gas were instead used to mine Bitcoin, emissions could drop to about 152 million tons, reducing the global flaring share by 0.41%.

Currently, only about 120 megawatts (MW) of mining capacity are known to be exploiting unused gas. Therefore, Bitcoin mining has enormous potential to further contribute to the reduction of global emissions by expanding the use of this otherwise wasted gas.

Bitcoin mining is quietly transforming, becoming significantly more efficient, environmentally friendly, and innovative in the way it sources energy. With continued improvements in hardware and increased use of renewable or untapped sources, the industry is not only reducing its carbon footprint, but also providing solutions to broader environmental issues such as gas flaring . If these trends continue, Bitcoin mining could make a real contribution to global sustainability efforts.