Crypto community criticises study on green-energy share in Bitcoin mining

Cermak questions the BMC study on green energy in Bitcoin mining.

Analyst Larry Cermak of The Block Research questioned the objectivity of the Bitcoin Mining Council (BMC) study on the share of green energy in the global Bitcoin mining industry.

This is really laughable. No methodology disclosed, very dubious result and super small sample of like 5% of the total hashrate. No one knows what the energy mix will look like until the hashrate from China relocates and a new proper study is conducted. Why do people trust this?

— Larry Cermak (@lawmaster) July 1, 2021

«Это смешно. Методология не раскрыта, очень сомнительный результат и сверхмаленькая выборка, около 5% от общего хешрейта. Никто не знает, как будет выглядеть структура энергопотребления, пока хешрейт из Китая не переместится и не будет проведено новое надлежащее исследование. Почему люди этому верят?», — написал Чермак в комментарии под твитом главы MicroStrategy Майкла Сэйлора.

One Twitter user noted that currently “50% of the hashrate is offline.” In response, Cermak called the BMC study a “massive joke” and noted that it would only alienate people who take the issue seriously.

It’s really a massive joke. How do they expect people who actually care about the energy mix to take it seriously? It will only alienate those people further

— Larry Cermak (@lawmaster) July 1, 2021

Zack Voell joined the criticism, noting that the result obtained in the report, “by pure chance,” corresponds to Elon Musk’s earlier demands.

This is the first time I’ve ever said this but: great tweet from @lawmaster.

A survey with no methodology during a tectonic shift in the network’s hashrate distribution that ~just happens~ to be over Elon Musk’s 50% renewable brightline? Nice! pic.twitter.com/O58o2xx1uv

— Zack Voell (@zackvoell) July 1, 2021

Coin Metrics founder Nic Carter joined the discussion with Cermak. He reminded that the study was conducted “in conditions of uncertainty,” and it is pointless to pause the analysis “just because some hashrate is offline.”

How can any conclusions be made from the survey if more than 50% of hashrate went offline and is relocating at the moment, which can easily take months?

— Larry Cermak (@lawmaster) July 1, 2021

In his thread Carter noted that the sample included companies accounting for 32% of the hashrate. The founder of Coin Metrics called the result impressive, but acknowledged that the survey largely touched American and European miners.

headline figure: 67.6% sustainable energy from the in-sample miners (32% of the network)

is there sample bias? absolutely. this is a primarily western initiative so mostly n. american and european miners. and of course if you are exclusively coal you may not want to disclose

— nic carter (@nic__carter) July 2, 2021

Carter acknowledged that the study’s results cannot be linearly extrapolated to the entire industry. However, he suggested weighting the sample data in a global extrapolation, which would yield a robust figure of 46.5% for the entire network.

can you linearly extrapolate this to the rest of the world? absolutely not. but you could, eg, conservatively assume a global avg energy mix (36.7% sustainable) for the out of sample miners. that gets you an overall sustainable figure of 46.5% for the entire network. pic.twitter.com/scX6Uw9j8D

— nic carter (@nic__carter) July 2, 2021

«The whole exercise is an attempt to stitch together a patchwork quilt of disparate sources. Obviously, more data is better than nothing», wrote Carter.

He advised the BMC to publish additional methodological hypotheses for miners outside the sample so the community can assess the aggregate figure. Carter is confident that it is not wise to wait for the return of 50% of the hashrate to gauge CO₂ emissions, as “this could take more than a year.”

In discussion with Carter, Cermak pointed out that beyond the insufficient sample, the problem with the study lies in the lack of open information about the criteria for selection and the representativeness of the survey participants.

The size of the sample is not the main point. How was the sample collected? How do you know it’s representative? Won’t it change drastically after miner relocation? Isn’t the tweet just pandering to Elon’s weird 50% demand? Why are people blindly trusting it?

— Larry Cermak (@lawmaster) July 1, 2021

Earlier, North American mining companies agreed to create an organisation to reduce greenhouse gas emissions from the industry. The meeting attended by Elon Musk was organised by MicroStrategy founder.

In June, BMC began operations. Its members agreed to share energy-use and hashrate data for research and educational purposes.

On July 1 the organisation released a report stating that in the second quarter of 2021 the share of green energy in the global Bitcoin mining industry stood at 56%.

Manufacturers of mining equipment in the PRC shifted their supply focus to Central Asia and North America amid restrictive measures by authorities.

In May, three associations at the PBoC banned companies from engaging in cryptocurrency-related business, and Vice Premier Liu He of the State Council of China announced measures regarding cryptocurrency mining and Bitcoin trading.

Later, Xinhua News Agency criticised digital gold and the methods of its extraction. In the following month, authorities in several Chinese provinces ordered miners to cease operations. Among them: Yunnan,Sichuan, Qinghai, Xinjiang and Inner Mongolia.

According to the mining company Foundry, around 70% of Chinese cryptocurrency mining operations have already shut down their equipment, and by June 30 their share is expected to approach 90%.

Poolin vice president Alejandro de la Torre, in a ForkLog interview, called the era of PRC dominance in the cryptocurrency mining industry over.

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