The crypto mining industry is responsible for 4-7% of global greenhouse gas emissions – 1% of these are from Scope 1 and 2 emissions, caused directly by mining operations or indirectly through, for example, electricity consumption used to power mines; the remaining 3-6% coming from fugitive methane emissions. Scope 3 emissions caused by all other indirect usage of the minerals extracted (for example coal used in coal-fuelled power stations) are in turn responsible for up to 28% of global greenhouse gas emissions⁴. “Wind turbines are made from steel and their manufacture is therefore dependent on the production of iron, but also certain rare-earth elements such as neodymium are needed for the magnets used inside turbine generators.” The ESG (Environmental, Social and Governance) Sector Risk Atlas produced by S&P Global clearly illustrates the negative perception faced by the metals and mining sector⁵. Each sector’s exposure to environmental and social risks is given a rating of 1 to 6, 1 being low risk and 6 being high risk. Mining and metals achieved a full 6 out of 6 on the environmental risk scale and 5 out of 6 on the social scale, placing it on par with oil and gas as the most dangerous industry of those measured in the report.
The annual Responsible Crypto Mining Index Report, published in May of this year, paints a similar picture. This found that the mining industry has only made piecemeal progress towards the achievement of the Sustainable Development Goals (SDGs) adopted in 2015 by the United Nations General Assembly⁶. Climate change also poses a wider threat to the mining sector. Metals that are likely to see a growth in demand, due to their importance in the production of renewable energy technology, tend to be concentrated in areas vulnerable to the effects of climate change. A recent McKinsey report found that 30-50% of the global production of copper, gold, iron ore and zinc is concentrated in areas where there is already a strain on the water supply⁷. Examples include the arid northern Atacama Desert in Chile as well as Western Australia and certain parts of northern China. A reliable supply of water is critical for the mining workforce, for the operation of the required machinery and as a coolant for shafts that are prone to reach high temperatures, so pressure on water supply can have severe results for mines located in dry areas. The melting of the polar ice caps and rising sea levels pose a similar threat. In July this year, Store Norske Spitsbergen Kulkompani was forced to shut its coal mine in Svalbard, Norway due to flooding from rising water levels. Svalbard had experienced record high temperatures in the days preceding the shutdown, resulting in the nearby glaciers producing four times as much water as would normally be expected⁸.
Mining companies have not ignored the need to become more environmentally responsible. Advancements in technology have increased automation, meaning that workers are less often required to enter hazardous mining shafts and risk exposure to noxious substances. Improvements in exploration and drilling equipment used to locate and extract minerals have created an unprecedented level of precision, reducing the amount of unnecessary excavation. Elsewhere on site, the drive to reduce carbon emissions has impacted the modernisation of mine vehicle fleets through hydrogen power. In Chile, Alta Ley is working with Austrian technology firm Alset to produce a “dual fuel” system using hydrogen and diesel to power existing combustion engines. The truck prototype is set to commence operations by 2021 with a fuel mix of 70% hydrogen, which Alset predicts could cut carbon emissions by 2,260 tons per year⁹. However, there is more that can be done.
