Is Bitcoin Mining’s Climate-Saving Potential Being Overestimated?
Possible exaggerations of bitcoin’s contribution to climate and environmental action could generate disappointment and be exploited by critics.
There is a fair bit of excitement in bitcoin social media channels about powering bitcoin mining with fugitive/stranded methane to reduce emissions. Methane is after all one of the worst greenhouse gases, as its global warming potential (GWP) is more than 80 times higher than CO2’s over 100 years.
The idea is that natural gas-powered electric generators used to mine bitcoin can prevent methane from reaching the atmosphere. Generators would collect methane at its several stranded sources, using it as a fuel and turning it into much less potent CO2 as a waste product of electric generation. Using these generators is also considered a better option than flaring, as the combustion of methane at the well tends to be less than optimal, releasing part of the methane and other pollutants into the air.
Hence the argument that bitcoin mining powered by generators fueled with stranded/fugitive gas is the fastest way to reduce global warming in a way that is technologically feasible right away, economical and that does not require individual behaviour change in order to work.
Flared, vented and fugitive methane from the oil & gas industry, animal farming, landfills, wastewaters and food & beverage production are all possible sources of gas to power bitcoin mining and turn it into CO2.
I wholeheartedly subscribe to bitcoin’s potential as an enabling factor for reducing harmful emissions, speeding up the adoption of renewable energy, facilitating power grid flexibility and the electrification of many final uses.
Here is the “but”: It seems to me some of the claims being touted about bitcoin’s climate-saving potential could be overestimated.
To the extent this is true, I tend to see whatever possible exaggeration of bitcoin’s climate and environmental contribution as an excessively stretched spring that could slump, generate disappointment and be exploited by critics.
A bit of context and my argument in a nutshell
Sources of methane and CO2 emissions are many and I’d like to put them briefly in context in relation to their origin and the role that bitcoin mining could play. Seeking a higher degree of accuracy and aiming to widen bitcoiners’ perspective, for each piece of context I will provide my argument in a nutshell, before proceeding to highlight some crucial gray areas about bitcoin’s potential contribution to climate action as it’s being sometimes promoted.
In the energy sector:
· most fugitive methane emissions are made of countless small dribs and drabs from several leaking points along the oil & gas supply chain. Flared and voluntarily vented methane from sources that would be easy to tap for bitcoin mining make only a small fraction of the total volume of gas leakage. Methane emissions originating from abandoned wells in the U.S. amounted to only 3% of the total oil & gas industry emissions in 2020, according to the Environmental Protection Agency. Based on a different industry breakdown used by the Intergovernmental Panel on Climate Change (IPCC), abandoned oil & gas wells were responsible for 6.9 million metric tons (MMT) of CO2 equivalent out of total emissions of 4,854.7 MMT CO2 Eq from the U.S. energy sector and total emissions from all human-related U.S. sources of 5,981.4 MMT CO2 Eq in 2020, according to another EPA report.
· This means methane emissions from abandoned oil & gas wells make up as little as 0.14% of the energy sector’s greenhouse gasses and 0.11% of total human-made emissions, as this EPA graph of emissions by category shows, with methane emissions by abandoned oil & gas wells indicated by the red arrow.
Stranded gas flaring in the U.S. was responsible for 0.2% of total gross U.S. greenhouse gas emissions in 2020 (13 out of 5,981.4 MMT CO2 Eq), according to the EPA. These figures are most likely underestimated, but even if they were much larger, they would still make a very small fraction of total emissions.
· The origin of a sizeable part of fugitive emissions is actually undetermined. Researchers subtract specific, bottom-up, detailed measurements from the overall volume estimated through aerial monitoring to gauge the volume of emissions whose origin is not attributed;
· we do know that only a fairly small minority of such emissions — the ones originating from deliberate flaring and venting — can be harnessed and used economically for bitcoin mining.
In a nutshell, we should not stop at simply turning methane into CO2 all the while methane remains available in the energy sector. I don’t see this as unreasonable climate/environmental maximalism, or as a case of the “perfect” being an enemy of the “good”. Turning methane into CO2 is simply not good enough, especially because it is possible to use revenues from mining with stranded oil & gas wells to close and remediate those wells — in a short enough time, economically and even profitably, contributing to bitcoin’s resiliency and with no negative tradeoffs for bitcoin, as I have argued in another article focusing on setting a “sunset clause” for bitcoin mining powered by stranded gas.
I also find it misleading to say that combusting methane that was previously being flared or vented is carbon negative. Mining with stranded gas can be characterized as “carbon negative” only if emission accounting is carried out from our anthropocentric, skewed, human point of view. From a climate point of view, whatever addition of carbon, however small, into the atmosphere is a positive addition. From the point of view of the climate and the environment, bitcoin mining with stranded gas does not reduce carbon emissions by, say, 63%, but it still increases them by 37%.
What this means is that the effect on the climate of bitcoin mining with stranded gas is not net positive, but simply less net negative. The negative effect of CO2 is cumulative. Slowing down the amount of water we are pouring into a glass does not mean that the glass will suddenly and magically start emptying or stop itself from overflowing if we continue pouring whatever amount of water. The negative effect of even smaller, marginal additions of carbon is oversized, as they also effectively shrink the size of this imaginary glass, i.e., they accelerate further climate mutations.
In the animal farming sector:
· methane emissions from animal farming are different from those in the fossil fuel industry and arguably quite less damaging for the climate in the long term. Emissions from animal farming are biogenic in nature, i.e., they are generated by living organisms (or recently dead organisms). This means they do not add new carbon into the atmosphere, and they don’t have the same global warming impact as methane of a fossil origin. Cattle biomethane is part of the ongoing, natural biogenic carbon cycle, which has been an essential part of life since time immemorial and that gets naturally removed from the atmosphere in about a decade within the carbon cycle itself. What can make a difference is the rate at which historically larger volumes of biogenic methane are added into the atmosphere, in relation to the ability of natural sinks to keep absorbing it over a decade or so;
· fossil fuel emissions, on the other hand, come from carbon which has been stored underground for millions of years. Unlike biogenic carbon, methane from the fossil fuel sector does add new carbon to the atmosphere. That’s because that carbon for all intents and purposes was not in the current carbon cycle and the combustion of fossil fuels frees this carbon at a speed much faster than it can be removed, resulting in net additional carbon into the air.
· only about a quarter of emissions from animal farming comes from manure, while about three-quarters come from enteric fermentation, i.e., fermentation inside animals’ guts. That means the vast majority of methane from ruminants is a byproduct of digestion, as it’s produced in the rumen and is mainly exhaled or belched by the animal, with a small fraction being farted.
In a nutshell, methane lasts only about a decade while CO2 lasts for centuries in the atmosphere. Turning biogenic methane from animal farming into CO2 from bitcoin mining subtracts emissions from the fast climate response mechanism of the carbon cycle (based on the atmosphere-ocean surface interface) and adds them to the slow climate response mechanism of the cycle (based on the deep oceans’ action).
In other words, bitcoin mining powered by biogenic methane decreases the naturally much faster-balancing flow of a short-term pollutant to turn it into a much harder to absorb long-term stock of CO2.
Using a more responsive method to calculate methane’s global warming potential (GWP*, pronounced GWP star), projected climate impacts show that methane emissions from the U.S. cattle industry have not contributed to additional warming since 1986. The California dairy industry will approach climate neutrality in the next ten years if methane emissions can be reduced by 1% per year, with the possibility to induce cooling if there are further reductions in emissions, according to a 2022 study published by University of California at Davis researchers.
GWP* is a new way of applying GWP to short-lived climate pollutants (SLCPs) like methane. GWP* does not convert greenhouse gas (GHG) emissions to an equivalent amount of CO2, which is always a positive number. Instead, GWP* takes into consideration the rate of change of emissions, equating the climate impact from a one-step permanent change of methane emissions to that caused by a one-off “pulse” change of CO2, which can be either positive or negative.
Although the scientific consensus around excessive global worming and its causes is overwhelming and pretty much universal, the relative accuracy and tradeoffs of the different metrics and models used to measure it is not settled yet. In the effort to increase the number of tools in the global worming measuring toolbox, its proponents say GWP* provides a better representation of long term climate responses to different rates of emissions, so that the temperature response towards methane emissions, better indicates the “warming” and “cooling” of the temperature compared with 20 years ago, related to an increase and decrease of CO2, respectively.
Although GWP* can result in an increased volatility in the measurements of emissions in the short term (short term over a 100-year horizon could mean a longer period than usually intended by the phrase “short term”), researchers have shown that GWP* provided a reliable link between methane emission and its long-term warming impacts while GWP overestimated the climate impacts when the emissions are constant or decreasing, as it’s the case in California’s dairy industry.
Researchers say GWP* should be used in combination with GWP to provide feasible strategies for fighting climate change induced by short-lived climate pollutants. By improving production efficiency and management practices, animal agriculture can lower its own emission footprint in the short term without needing any help from bitcoin mining, whose potential could be better spent developing long-term solutions for fossil fuel carbon emissions, renewable energy and flexible power grids.
Unlike the “carbon negative” claim relating to bitcoin mining with a fossil fuel, whose cumulative impact is still increasing both in the short and long term, in the case of biogenic methane emissions from the animal industry in California it might arguably be more appropriate to characterize their trend as “carbon negative”. It seems fair enough to note that in terms of cumulative climate impacts, GWP-based calculations in farming were aggregating all the past impacts from 1981 to 2017 without acknowledging the decrease in warming tied to methane’s faster absorption cycle in those years, during which the size of the herd in California has been also shrinking along with its emissions, according to the researchers.
For instance, a herd of 100 cows will contribute new methane to the atmosphere. But if thanks to improved management or genetics, the herd remains constant and reduces their emissions by 0.3% every year over the next 20 years, or else both decreases and also reduces their emissions, in the first case their methane addition will approximate what is being removed from the atmosphere and be carbon neutral, and in the second case it will emit less methane than it’s being removed in the faster carbon cycle and it will be carbon negative, inducing cooling compared to previous periods, according to the University of California study. The same can’t be said about the new CO2 emitted by bitcoin mining with fossil gas.
Going back to cows, due to the fact that three-quarters of their biogenic methane comes in the form of paunch exhalations and can’t be easily harnessed, only a quarter of this biogenic methane in the form of manure can be collected, managed and used as a fuel to power bitcoin mining. The rest is quite impossible to collect and use economically and efficiently for any purpose.
I haven’t found any estimates on the economics of bitcoin mining powered by biogas from animal farming. Its feasibility and time horizon is thus yet unknown to me.
In landfills and other waste management sectors:
· these methane emissions are also biogenic and the same general considerations apply to them as emissions from animal farming.
I haven’t found any estimates on the economics of bitcoin mining powered by biogas from landfills and other waste management sectors.
In Essence
In terms of climate action, the fossil fuel sector is by far the main problem, both quantitatively for its huge contribution to overall emissions and qualitatively for the longer-lasting and more insidious nature of its emissions. That’s where we should focus our attention and resources.
Bitcoin mining can only address a very small slice of the overall methane problem, but it’s still worth doing it. Within these constraints, the real bang for our limited buck consists of using stranded methane from the fossil fuel sector with a sunset clause. Mining with stranded oil & gas sources should aim to close and remediate stranded wells once sunset bitcoin mining has generated enough revenues to pay for such closures.
Bitcoin mining with biogenic methane may actually make the long-term problem worse and decarbonization harder, as it increases the long-term stock of CO2, which is harder to get rid of, while it decreases the short-term flow of methane, whose emissions from animal farming are more readily absorbed and that in places like the U.S. have been decreasing anyway.
It’s a bit like borrowing from our future selves, bringing forward partial short-term climate mitigation at the expense of long-term climate relief, that future generations might have an even harder time achieving.
In other financial terms, it’s as if we decreased our short-term debt on which we pay higher interest rates (higher global warming potential) but that has relatively loose terms that make paying it off somewhat easier (biogenic methane is faster to absorb and it doesn’t represent additional carbon) in order to increase our long term debt, on which we pay lower interest rates (lower global warming potential) but whose terms make paying it off so much more difficult (CO2 is harder, longer to absorb and in the case of stranded methane from the oil & gas sector it does represent additional carbon).
Is it worth it? Perhaps, but it seems to me there is not enough awareness about possible negative tradeoffs and unintended consequences of stranded/fugitive gas mining among progressive bitcoiners.
Large investments in biogenic methane to power bitcoin mining, or anything else for that matter, might turn out to be not the most efficient allocation of limited capital in terms of climate action.
If we do decide to tackle biogenic methane, ideally revenues from such activities should at least in part fund actions reducing CO2 emissions at the same time within their industries. There could be different possible examples of such mitigating actions and synergies, using a “sunset” logic or at least reducing the dual emission footprint of each sector — but I haven’t seen any estimates yet.
Excitement about either fossil or biogenic methane emission abatement without clear sunset clause provisions may have the unintended consequence of indirectly aiding and abetting our CO2 long-term entrapment. Or incentivize worst practices in emerging economies in terms of animal farming options and management.
To whatever small extent we can successfully harness stranded/fugitive methane, we should definitely do it, but our priority should be to stop as completely and quickly as possible its use and our addiction to fossil gas in the first place.
Some Gray and Not-so-Gray Areas
There might be another source of possible overestimation about the potential of bitcoin mining with stranded methane to help climate action. It has to do with the data used — quite convincingly — by climate-tech venture capital investor and author Daniel Batten to estimate such potential.
These data and the picture they help Batten paint might turn out to be correct going forward, but I think it’s worthwhile pointing out a few elements that could make their impact less black and white and more nuanced toward gray shades.
Methane Losses and Emission Underestimations
Batten bases some of his arguments on a study by the U.S. Environmental Defense Fund (EDF), where methane emissions are said to have been underestimated by 3.5 times by the Environmental Protection Agency’s calculations, based on a satellite assessment of 1,200 flare sites in the Permian Basin.
Batten takes this 3.5 underestimation factor and argues the overall addressable stranded methane market that bitcoin could tap to power mining and mitigate emissions is 3.5 times bigger than previously thought, and probably even larger. This would imply that harnessing all this lost methane could lower overall emissions by a lot.
The problem I see here is that this 3.5 factor is the highest I have been able to find among different estimates for different areas and it might lead to overoptimistic conclusions.
EDF says in its methodological note that “our loss rate estimate for the Permian Basin is substantially higher than the national average” measured by the EPA.
It’s worth noting that in the same document EDF quantifies the EPA’s possible underestimation of gas losses at about 3.5 times at first and subsequently at 3 times. Both figures point to a large underestimation, but in a context in which decimal points can make a large climate and financial difference, it’s not an inconsequential discrepancy.
EDF goes on to note in the same methodology document that if instead of taking the EPA dataset one takes the dataset from a synthesis study that used both site and basin-level data, EDF’s own conclusions lead to a methane extra loss rate that is only about 75% higher, not 3.5 times higher than previously estimated.
The EDF-post Batten himself references for his “3.5-time” assertion says that a synthesis of EDF’s overall research found that the U.S. oil and gas industry was emitting about 60% more than the Environmental Protection Agency estimated at the time.
In its own Global Methane Tracker 2022, based on the latest available scientific studies and measurement campaigns, the International Energy Agency has estimated that methane emissions claimed for individual producing basins, fields, facilities and the energy sector in general are about 70% greater than the sum of estimates submitted by national governments.
It’s worth noting that the sources of this extra methane emitted into the air might end up increasing the proportion of methane that is unusable for bitcoin mining.
When describing this extra methane leakage in the extraction and production phase of gas, EDF’s presentation doesn’t make any references to flaring or venting, which are the sources that bitcoin mining could actually tap into. What EDF says is that methane emissions from equipment leaks and pneumatic devices were larger than previously thought.
“The study found that emissions from the two sources (Liquid unloadings, when producing, wells are cleared of water and other liquids inhibiting the flow of gas; Pneumatic controllers used to regulate routine functions at well sites) were responsible for a significant portion of methane emissions from the production sector”, EDF explains.
In other words, even if emissions are higher than previously estimated, not all those extra emissions can necessarily be used to power bitcoin mining.
About 60% or 70% or 75% more emissions than previously estimated are by all accounts a lot. But it’s way less than the 3 times or 3.5 times underestimations indicated by EDF with a methodology referencing a relatively low total emission base level.
If a venture capital fund went around proposing to potential investors an addressable market of at least 28 megatons (Mt) of stranded methane around the world and then this market turned out to be 12.8 Mt, or less than half, or even somewhere in between 28 and 12.8 Mt, that might be, again, a problem for everybody involved and our credibility.
Conclusions
Unless I have misinterpreted something along the way, Batten’s assessment might have overestimated the stranded methane market that bitcoin mining can address, along with bitcoin’s climate reach as it’s being presented to regulators, politicians and other decision-makers.
Bitcoin mining should not probably overextend itself to help sectors where its usefulness might be limited, as in abating biogenic methane from animal farming. It should probably focus instead on where it can be more useful, as in closing stranded fossil fuel wells spewing methane and CO2. And it should definitely prioritize segments where it might really shine, like helping renewable energy plants and flexible power grids develop and electrify as many final uses as possible.
It’s entirely possible that actual developments in bitcoin mining, emission accounting and climate action will disprove my concerns and validate Batten’s assessment — which in many respects is very persuasive. But I think it’s worth considering such concerns if they can help better prepare and promote bitcoin mining climate capabilities.
In other words, it’s better for bitcoin mining to under-promise and overdeliver than to over-promise and underdeliver in the climate action race.
°°°
This article has been modified on December 3rd, 2022, in reference to the short-term volatility of emission readings that the GWP* model could produce.
I also deleted a section on combustion efficiencies of gen sets used to power bitcoin mining with stranded gas, as it was based on a misunderstanding between myself and Daniel Batten over the use, meaning and field of application of the phrases “combustion efficiency” and “electric efficiency”.
