Bankrolling Bitcoin Pollution: How Big Finance Supports a New Climate Threat

  • Sergey Maga
  • 20 June, 2024 09:17
Bankrolling Bitcoin Pollution: How Big Finance Supports a New Climate Threat

Greenpeace USA has published a report detailing how major financial institutions are supporting the environmentally damaging Bitcoin mining industry. Bitcoin mining has grown from a hobby to a massive industry, with large-scale mining operations consuming as much electricity as small cities. In 2023, Bitcoin mining used an estimated 121 TWh of electricity, comparable to countries like Poland. This electricity often comes from fossil fuels, causing significant carbon emissions. Despite Bitcoin’s image of being independent from traditional finance, the industry relies heavily on investments from major financial institutions. Banks, asset managers, and insurers are major supporters of Bitcoin mining companies, which contradicts their public climate commitments, according to Greenpeace.

Major financial institutions like BlackRock, Vanguard, and MassMutual are heavily invested in Bitcoin mining. BlackRock, the world’s largest asset manager, was the third largest investor in Bitcoin mining companies in 2022. This investment goes against their public pledges to support net-zero emissions by 2050. Trinity Capital, Stone Ridge Holdings, BlackRock, Vanguard, and MassMutual financed the most carbon emissions from Bitcoin mining companies in 2022, totaling over 1.7 million metric tons of CO2. This is equivalent to the emissions from over 335,000 American homes using electricity for a year.

Bitcoin mining companies like Core Scientific, Riot Platforms, Bitfarms, Hut 8, and Marathon Digital generated the most carbon emissions in 2022. Their operations added as much carbon to the atmosphere as nearly 850,000 American homes. The industry’s lack of transparency makes it hard to gauge the full extent of its environmental impact. Many mining companies do not report their energy use or carbon emissions accurately. This allows them to avoid scrutiny and continue their polluting practices without accountability.

The solution lies in changing Bitcoin’s underlying code from Proof-of-Work (PoW) to a less energy-intensive system like Proof-of-Stake (PoS). Ethereum made this transition and reduced its energy use by 99.95%. Until Bitcoin undergoes a similar change, financial institutions must take responsibility for the environmental damage their investments cause. They need to disclose their financed and facilitated emissions related to Bitcoin mining and align their investments with their public climate commitments.

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