Return Protocol calculates Bitcoin’s carbon footprint using a bottom-up approach. This is achieved in three parts:

Energy Consumption: To calculate total energy consumption, Return Protocol estimates the average yearly TH/s and Power Draw (W/h) of ASIC Miners since 2014. The information is calculated using data from data.hashrateindex.com which provides a graph of historically popular ASIC Miners. The mining efficiency of equipment used prior to 2014 is estimated using information provided by Foundry. These values are then divided by the daily hash rate to approximate the total number of miners on any given day. The subsequent values are multiplied by average daily Power Draw to find an estimated daily power draw (MWh).

Miner Geolocation: Bitcoin relies on a global community of miners to validate each Bitcoin transaction. To calculate Bitcoin’s carbon intensity, the Grid Emission Factor (GEFs) of each country/region where Bitcoin is mined are needed (see Ethereum methodology). Unfortunately, due to Bitcoin’s culture of privacy, many miners choose to obfuscate their location by using VPNs. This complicates finding an accurate weighted GEF mix. Return Protocol leans on research conducted by University of Cambridge which provides miner geolocation data from 2019-2021. This data set is used to forecast the GEF mix for 2022 and all years prior to 2019. To account for less efficient/sustainable energy grids, an inefficiency factor is applied (1.875 percent each year). These values are multiplied by estimated daily power consumption to produce an estimated daily value for carbon intensity (tCO2e).

Emission per Transaction: Finally, estimated daily carbon emissions are divided by the total transactions on each equivalent day. The product represents the estimated carbon intensity per transaction per day (Tx/tCO2e). To calculate a user’s individual on-chain carbon footprint, the Tx/tCO2e is multiplied by the quantity of transactions the user made on the equivalent day. The process repeats for all days the user made transactions on the Ethereum Blockchain. The products are summed to calculate the user’s total lifetime carbon footprint.

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