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Bitcoin is getting even dirtier

New York(CNN Business) Bitcoin is a pollution-creating mess. Despite efforts to make the energy-intensive mining process friendlier to the environment, it has grown significantly more reliant on fossil fuels over the past year.

China's cryptocurrency mining ban in the spring of 2021 significantly worsened Bitcoin's environmental impact, according to a new research on mining published in Joule. It is because Bitcoin miners were tapping into a significant amount of Chinese hydropower which suddenly evaporated when China made mining illegal, said Alex de Vries, one of the study's authors and a researcher at the School of Business and Economics at the Vrije Universiteit Amsterdam.

So miners took their business elsewhere, including countries using significantly dirtier energy than China. Electricity sources powering the Bitcoin network were just 25.1% renewable in August 2021, nearly 17 percentage points lower than the 2020 average.

Mining Bitcoin each year produces as much pollution as Greece created in 2019, the study found. A single Bitcoin transaction results in the same carbon footprint as a traveler flying from New York to Amsterdam.

"After China banned Bitcoin mining, everyone was expecting it to become more green, but we are somewhat surprisingly seeing the opposite happening." said de Vries. "A lot of the hydropower these miners got previously in China has now been replaced with natural gas from the US."

Bitcoin mining is still booming in the United States. According to the study, many of the American Bitcoin mines are powered by natural gas and coal. Kentucky now offers subsidies to crypto miners, looking to attract business for the state's coal industry.

Kazakhstan has also become a destination for Bitcoin miners. According to the study, the country's electricity grid is reliant on hard coal, which is even more polluting than the coal used in China.

The hydropower behind China's Bitcoin mines was often held up by cryptocurrency advocates to rebut criticism about the technology's environmental impact.

In May, Coinbase — one of the largest cryptocurrency marketplaces — published a "fact check" citing China's hydroelectric plants in trying to undermine the idea Bitcoin contributed to climate change.

Coinbase did not respond to CNN's questions on whether it stood by its fact check in light of China's cryptocurrency crackdown, but said in a statement it believes "the industry is innovating at an encouraging pace to solve these challenges... Community-led change is possible and crypto can be part of the fight against climate change if we come together to solve these challenges."

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