Is Bitcoin’s Carbon Footprint Improving?

Is Bitcoin’s Carbon Footprint Improving?

By Dominik Poiger, Head of Product Management, Iconic Holding 

Bitcoin’s hashrate dropped significantly from its all-time-high and is sitting at a rate not seen since November 2020. According to data from, Bitcoin’s current hashrate is now (as of 21 June 2021) at approximately 110M TH/s, 30% below its all-time high of around 190M TH/s from a few weeks ago.

Bitcoin mining has been largely concentrated in China as miners were aggressively seeking cheap sources of electricity around the globe. According to, 65% of global bitcoin mining capacity was residing in China. Overcapacity of (partly) renewable energy sources, especially hydroelectric power in the Chinese province of Sichuan, attracted miners to China. This is now backfiring as – according to various sources – mining operations in China are ordered to shut down, which is causing a decrease of hashrate. In Sichuan and Yunnan, for instance, mining operations were shut down for inspection. Other Chinese provinces, such as Xinjiang, have taken similar steps to shut down miners, however potentially only temporarily.

Why is Hashrate so Important?

“Hashrate” refers to the total combined computational power that is being used to mine and process transactions on a Proof-of-Work blockchain such as Bitcoin. A high hashrate is a general indication of a stable Bitcoin mining environment as more resources are deployed to the Bitcoin network to process transactions. It also means that miners are expanding their operation due to their increasing confidence in the network. Additionally, the higher the hashrate, the more resilient the network is to attacks such as the “51% attack”.

But Bitcoin’s hash rate has not been relevant when predicting its price and the correlation between changes in bitcoin’s price and the hashrate has fluctuated around zero despite some arguments that price follows hashrate or hashrate follows price.[1]

Source: Iconic Funds GmbH,

Source: Iconic Funds GmbH,

Source: Iconic Funds GmbH,


Mechanics of Bitcoin to Balance New Issuance

Bitcoin is a perfectly oiled machine to weather the fluctuation of mining equipment being added to or subtracted from the network. Through the so called “difficulty adjustment”, the protocol ensures that a new block is mined – on average – every 10 minutes.

Source: Iconic Funds GmbH,

Takeaway for Bitcoin Investors

Even with the sharp decline of hashrate committed to the Bitcoin network, long-term investors can ignore the China mining FUD.

Firstly, the protocol will continually balance itself so that the issuance of new bitcoin through the block subsidy is unaffected. Secondly, miners will move to other jurisdictions where hashrate can be deployed, potentially with more political reliability. Thirdly, global bitcoin adoption as store of value, medium of exchange and unit of account is on full display. In a most recent example, the dollarized Latin-American country El Salvador has made bitcoin legal tender, making it the first country to accept bitcoin as official currency and inspiring other nations such as Paraguay to follow suit.

Is Bitcoin’s Carbon Footprint Improving?

Chinese bitcoin mining has been linked to China’s dependency on fossil fuels. According to the U.S. Energy Information Administration (EIA), coal-based energy sources contributed 58% to China’s carbon footprint in 2019.[2] A side effect of hash power moving to other jurisdictions could be that the perception of Bitcoin’s carbon footprint as well as the factual carbon footprint of bitcoin may improve. Other jurisdictions that have already courted Chinese miners may have a less carbon-heavy energy mix, thereby improving the overall carbon footprint of bitcoin mining.



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