Professor Coin: Bitcoin, energy and the future of sustainable crypto

Professor Andrew Urquhart is Professor of Finance and Financial Technology and Head of the Department of Finance at Birmingham Business School (BBS).

This is the ninth installment of the Professor Coin column, in which I bring key insights from published academic literature on cryptocurrencies into the future. Declutter readers. In this article I discuss Bitcoin energy consumption and the future of sustainable cryptos.

When you hear the words “Bitcoin mining“You might imagine gigantic warehouses full of whirring computers, gobbling up electricity like there is no tomorrow. That image is not far from reality.

Since Bitcoin was launched in 2009, it has been… proof-of-work (PoW) system has been both its greatest strength and its greatest controversy. It keeps the network secure and decentralized, but also links digital finance to very real energy and environmental costs.

How big is Bitcoin’s energy footprint?

The reference benchmark is the Cambridge Bitcoin Electricity Consumption Index (CBECI), which estimates that Bitcoin mining consumes electricity on the scale of medium-sized countries. But here’s the catch: Bitcoin’s energy consumption doesn’t rise smoothly. Instead, it follows market cycles. When Bitcoin’s price peaks, miners turn on more platforms, increasing hashrate, difficulty, and electricity demand. When prices drop, older or less efficient machines are retired.

Stoll, Klaaßen and Gallersdörfer (2019) estimated annual consumption at the time at around 46 TWh, with ~22 megatons of CO₂ emissions. Recently, new data suggests that consumption has grown substantially.

According to the 2025 Cambridge Digital Mining Industry Report, Bitcoin’s annual electricity consumption is now estimated at 138 TWh, with network-wide emissions of approximately 39.8 Mt CO₂e. The same report also notes that 52.4% of the energy used by miners will come from sustainable sources (renewables + nuclear energy) as of 2025.

These updated numbers help us see that while Bitcoin’s carbon footprint remains significant, the composition of its energy mix is ​​also changing – providing a more nuanced story for 2025.

Beyond carbon: the full footprint

New research asks a broader question: what are the total environmental costs? A 2023 article by Chamanara et al. (2023) estimates Bitcoin mining at ~173 TWh, with additional CO₂, water and land effects.

Meanwhile, the UN University warned that mining is heavily dependent on freshwater in regions with a scarce supply. And it’s not just about running machines: de Vries (2021) estimated tens of kilotons of electronic waste annually from discarded ASIC installations, as miners sort through hardware every few years. This holistic view means that Bitcoin’s footprint is now seen as multi-dimensional: electricity, emissions, water, land and waste.

Proof-of-work versus Proof-of-stake

This is where the story gets interesting. Not every blockchain guzzles energy like Bitcoin. In September 2022, Ethereum’s Merge replaced PoW proof of stake (PoS). Overnight, energy consumption dropped by ~99.9%. Same user experience, radically different environmental profile. This one step showed the world that crypto doesn’t have to be a climate villain.

Ethereum’s success has raised uncomfortable questions for Bitcoin. If another major chain can deliver security and functionality without the same energy burn, should Bitcoin follow?

Purists say no: PoW is what gives Bitcoin its incorruptible, apolitical security. Critics counter that holding prisoners of war would bring political backlash, carbon taxes or even outright bans in certain jurisdictions.

Can mining go green?

Not all miners are bad environmental actors. Some claim they are part of the solution, not part of the problem. In Texas, mining companies make deals with grid operators, curtailing power when demand rises. In Iceland and Canada, miners connect to cheap hydropower. Recent tech research is even exploring the use of mining to monetize excess methane from landfills or stranded renewable energy sources that would otherwise be wasted.

The optimistic story goes like this: Bitcoin mining could act as a “buyer of last resort” for excess green energy, smoothing out variability in solar and wind energy production. Studies such as Hossain & Steigner (2024) and others suggest that under the right conditions, mining could become an economic driver for renewable projects.

But the jury is still out: whether miners are truly accelerating the green transition or simply opportunistically pursuing cheap energy depends on location, incentives and regulations.

The way forward

So where does that leave us in 2025? Here are the big takeaways:

• Bitcoin’s footprint is real and significant. We are not just talking about electricity, but also about carbon, water, land and electronic waste.
• Design is important. Ethereum’s Merge proved that PoS can reduce energy costs without breaking a network. Bitcoin, on the other hand, has doubled its PoW.
• Nuance is needed. Not all mining is equal; coal platforms in Kazakhstan are very different from hydroelectric farms in Quebec.
• Policy pressure is increasing. Expect governments to not just ask “how much power?” but “what kind of power, where and with what externalities?”

Bitcoin will always carry the energy issue with it. Whether it becomes a climate villain or an unlikely green ally depends on the choices miners, policymakers and communities make in the coming years.

For now, one truth is clear: in crypto, the invisible is not weightless. The future of digital money is literally connected to the electricity grid.

References

• Cambridge Center for Alternative Finance, 2025. Cambridge Digital Mining Industry Report 2025. Cambridge Judge Business School.
• Chamanara, N., Pereira, AO, Dsouza, C., Pauliuk, S. and Hertwich, E.G., 2023. The environmental footprint of bitcoin mining around the world. The future of the earth11(11), e2023EF003871.
• de Vries, A., 2021. Bitcoin boom: what rising prices mean for network energy consumption. Joule5(3), pp. 509–513
• Stoll, C., Klaaßen, L. and Gallersdörfer, U., 2019. The ecological footprint of bitcoin. Joule3(7), pp.1647–1661.
• Hossain, M. & Steigner, T., 2024. Balancing innovation and sustainability: addressing the environmental impact of Bitcoin mining. 10.48550/arXiv.2411.08908.
• de Vries-Gao, A. & Stoll, C., 2021. Bitcoin’s growing e-waste problem. Conservation and recycling of resources175. 105901. 10.1016/j.resconrec.2021.105901.