Cryptocurrencies could remake our financial systems, but question marks remain over their green credentials. Now a new analysis suggests their environmental impact has gotten even worse after a mass exodus of miners from China.

The power consumption of cryptocurrencies is a contentious subject. For a start, accurately measuring the amount of energy used by a decentralized system spread across several continents using a wide diversity of hardware configured in innumerably different ways is fraught with difficulties.

Nonetheless, it’s clear that the leading contenders, like Bitcoin and Ethereum, use a substantial amount of electricity. That’s thanks to complex mathematical puzzles that need to be solved to validate transactions and mint new coins, a process known as mining. This process has been almost entirely professionalized by large mining operations running data centers full of specialized chips.

That’s a problem, because if the bulk of that energy comes from fossil fuels, these networks are likely generating significant carbon emissions. Estimates for the share of renewables in the electricity that powers Bitcoin transactions range from 39 percent (as per the Cambridge Centre for Alternative Finance), to 73 percent (as per digital asset management firm Coinshares).

But major upheaval in the mining market last year seems likely to have changed the picture. In early 2021 roughly 44 percent of miners were based in China, but in June authorities there effectively outlawed the activity, leading to a mass exodus out of the country. A new analysis in Joule suggests miners moved to places with considerably dirtier energy, such as the US and Kazakhstan, increasing Bitcoin’s climate impact by as much as 17 percent.

The researchers were able to track the exodus using data from “mining pools,” organizations that help miners pool their computational resources. By joining a pool miners reveal their IP address, which can be used to track their locations. While the exit from China led to a general dispersal of mining, several countries saw their share increase significantly.

By last August a quarter of all mining had shifted to Kazakhstan, with another 15 percent in the US and 9 percent in Russia. That’s problematic, because electricity in these countries has significantly higher climate impacts than in China.

That might sound surprising given China’s heavy reliance on coal, but the country also has huge amounts of renewable hydropower. The authors report that miners used to relocate seasonally to Sichuan and Yunnan provinces to take advantage of abundant cheap electricity during the wet season, before migrating back to places with cheap coal power like Xinjiang and Inner Mongolia for the rest of the year.

After the exodus, the share of hydropower in Bitcoin’s energy mix roughly halved from 33 percent to 17. This contributed to a more general slump in the contribution of renewables from 42 percent to 25 percent. Conversely, natural gas’ share essentially doubled from 15 percent to 31 percent.

Overall, the researchers predict that the amount of carbon produced for each unit of energy used by Bitcoin has increased by 17 percent. According to those figures that means the network now produces 65 mega-tons of CO2 a year, which is roughly 0.2 percent of global emissions, or slightly more than the nation of Greece.

These exact figures are up for debate, but the analysis makes clear that the cryptocurrency’s green credentials are headed in the wrong direction. An additional worrying trend the authors note is the revival of shuttered fossil fuel plants in the US that were no longer economical, but have now found a new lease on life powering cryptomining.