The impact of bitcoin mining on the climate is comparable to raising livestock or burning gasoline when taken as a percentage of market value, according to researchers at the University of New Mexico in Albuquerque.
Cryptocurrency mining is energy-intensive because it requires highly specialized computers – and most of the electricity it consumes is generated by burning fossil fuels that are warming the planet. A research paper published in Scientific Reports on Thursday found that the climate-related economic damage from mining the popular digital currency, bitcoin, exceeded its market value on 6.4% of the days it traded between 2016 and 2021.
The study calculated the climate cost of bitcoin mining against the average market price, and compared it to other commodities such as crude oil, gold or beef. This means that the results do not reflect the total emissions from these industries, which would be much greater, but their relative impact.
The climate impact of gold mining, to which bitcoin is often compared, is only 4% of the average market price in an average year, compared to 35% for the world’s most popular cryptocurrency between 2016 and 2021. This calls into question the overall sustainability of the sector.
The researchers said: “While proponents have presented (Bitcoin) as representing ‘digital gold’, it operates from a climate damage perspective like ‘digital ore’, indicating the need to find more efficient ways to produce tokens, or increase regulation.
Bitcoin mining, which accounts for about 41% of the global cryptocurrency market, used more energy than was used to power entire countries like Austria or Portugal in 2020. Mining bitcoin, ether, litecoin, and Monero generated 3 to 15 million metric tons of CO2 emissions. Carbon from January 2016 to June 2018, according to research cited by the research. This is equivalent to emissions from Afghanistan, Slovenia or Uruguay in 2018.
Bitcoin’s carbon footprint is also increasing over time because, in order to mine new coins, many miners are competing to verify transactions on the blockchain. The fact that more and more miners are vying to solve increasingly challenging operations means increased energy use overall.
That’s why a bitcoin mined in 2021 would have released about 113 metric tons of CO2 equivalent — 126 times more than the one mined in 2016, according to the researchers. The paper estimates the economic value of this damage at $11,314 for a single bitcoin mined last year, while the total climate damage value from all bitcoins mined between 2016 and 2021 could reach $12 billion.
In recent months, falling profit margins from bitcoin mining have prompted miners to operate more efficient machines — a move that has lowered greenhouse gas emissions from the industry, according to a different report earlier this week. It is estimated that emissions this year are 14.1% lower than they were in 2021, account for about 0.1% of human emissions globally, and about half of what gold miners generate in absolute terms.
Cryptocurrency miners are also ramping up efforts to get a greater share of the energy they consume from renewable sources such as geothermal, hydro, solar and wind. Researchers at the University of Albuquerque ran a simulation and concluded that if renewables such as wind and solar accounted for 88.4% of the total amount of energy used for bitcoin mining between 2016 and 2021, the climate damage would be reduced to just 4% of the average market price.
Another way to reduce the impact of the climate is to switch to a different mechanism for verifying transactions – and producing coins. Ether, the second largest cryptocurrency, this year moved to a mechanism called Proof of Stake, which the study said will reduce its estimated energy consumption by more than 99%.
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