MIT Researchers Think Bitcoin Mining Needs More Research to Avoid 'Greenwash'

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A research paper from the Massachusetts Institute of Technology suggests that the net benefit to the grid claimed by Bitcoin (BTC) miners needs to be scrutinized more closely.

The study highlights the need to consider the cost of adding infrastructure to connect Bitcoin mining to the grid.

· The SEC is developing climate-related disclosure rules for miners to standardize reporting.

While Bitcoin (BTC) miners claim to provide net benefits to the grid, their renewable energy claims should be scrutinized more carefully, according to a new research paper from the Massachusetts Institute of Technology (MIT).

The paper cites an agreement between a large flexible load operator in Texas and ERCOT, the state's energy operator.

Bitcoin mining needs more research to verify claims of burning methane

During December's winter storm Elliot, miners were able to shut down to meet a 1.4 gigawatt increase in demand. Bitcoin proponents espouse their ability to adjust mining loads to stabilize the grid, the paper said.

However, the authors argue that miners can only measure the benefits of grid balancing if the cost of adding bitcoin mining to the grid is taken into account. They must also consider whether their grid balancing efforts offset the environmental costs of starting backup generators.

Additionally, flared methane gas projects may not be as effective as miners claim.

Burning methane releases carbon dioxide into the atmosphere, which cools the planet 28-36 times less than methane over 100 years.

A recent study showed that generators that burn methane gas to generate electricity are only 91.1% efficient. The miner previously claimed the process was 99 percent efficient.

Less efficiency also means miners can only remove 4-10% of methane from the atmosphere.

Canadian mining company Upstream Data recently sued Colorado-based Crusoe Energy for copying its technology for harnessing stranded natural gas. The company recently claimed that acquiring Great American Mining would reduce carbon emissions by the equivalent of about 170,000 cars.

Renewable energy mix needs better reporting to avoid greenwashing

The document also points out the importance of verifying the energy mix of miners for mitigating climate concerns.

For example, the Bitcoin Mining Council says renewable energy could reduce mining emissions per kilowatt-hour below the U.S. average. However, the paper notes that miners must report green energy under global carbon accounting standards to substantiate their claims.

Bitcoin estimates the evolution of the energy mix | Source: Digital Economist

They argue that existing disclosures by the largest public companies do not provide enough data.

The U.S. Securities and Exchange Commission is due to issue climate-related disclosure rules for miners next April, while the Federal Reserve is developing climate risk management requirements for banks involved in cryptocurrencies.