Bitcoin Mining in Sweden

Abstract: Bitcoin mining is an industry which for many years has been criticized for its electricity consumption, which globally today equals roughly that of small countries such as Sweden, and its subsequent contribution to climate change. However, electricity consumption does not by default equals greenhouse gas (GHG) emissions and not many studies have been done on the subject with a focus on Sweden, hence this study aims to provide some clarity to the otherwise opaque space of Bitcoin mining. The study has been examining the effect Bitcoin mining operations have on the Swedish energy system, in terms of additional power consumption and GHG emissions, with a focus on electricity and heating. The study has partly been conducted as a response to the proposed ban of Bitcoin mining in Sweden and the European Union by the Director Generals at the Swedish Environmental Protection Agency and the Swedish Financial Supervisory Authority in the fall of 2021. Data covering the Bitcoin mining space is in general opaque in terms of data availability and filled with nuances and perspectives depending on assumptions, hence multiple cases have been used to account for different carbon intensities, technologies, and time effects. Data sourcing has been combined with calculations and scenario analysis. The study is including an examination of the effects of heat recovery from the Bitcoin mining machines as well as power consumption and potential use of future excess electricity. Through the different cases it is observed that the effect Bitcoin mining has on the overall GHG emissions of Sweden corresponds to a rounding error, ranging in an interval of an increase of national GHG emissions by a tenth of a percent to a reduction of national GHG emissions of around half a percent depending on the different cases. The study suggests that instead of banning Bitcoin mining operations within Sweden and the European Union, regulators should use administrative tools and economic incentives to encourage Bitcoin miners to use renewable energy and excess electricity. It is also reasonable to incentivize Bitcoin mining operations to make use of the generated waste heat, which could potentially be used in the heating of individual homes or in large scale district heating facilities. The study also finds a potential use case for Bitcoin mining machines as a future substitute to electric heaters under certain technical conditions.