Bitcoin is less ‘digital gold’ and more ‘digital beef’, study suggests cryptocurrency has greater climate impact than gold mining and climate change natural gas extraction or raising cattle for meat.
Research from the University of New Mexico, published in the journal Scientific Reports, assessed the climate cost of various commodities as a part of their overall market capitalization.
Some, like coal, cause almost as much damage as the total market value they support, a ratio of 95%, according to the analysis. Other commodities, such as pork production, generate huge climate impacts in absolute terms, but only because the market is so massive.
Bitcoin, however, falls between the two. According to economists, climate damage related to the production of digital currency has averaged 35% of its market value over the past five years, peaking at 82% in 2020.
This is comparable to beef, which causes damage equivalent to 33% of its market, or natural gas, which reaches 46%. And it far exceeds gold, the commodity cryptocurrency backers most compare it to, which has a climate impact of just 4% of its market value, thanks to its huge global value that eclipses the great environmental impact of its extraction.
Digital currency’s disproportionate climate damage stems from its reliance on a computer process to verify transactions called “proof-of-work mining,” which requires huge expenditures of electricity to participate, rewarding those who perform it with luck. to earn new Bitcoin.
For more than one in 20 days during the time period the researchers examined, the climate damage caused by these “bitcoin miners” exceeded the value of the coins produced, primarily due to this electricity consumption.
Some have argued that renewable energy could meet this demand, but the authors wrote that the climate damage for every dollar of value created was 10 times worse for bitcoin than for wind and solar generation – representing “a set of red flags for any consideration as a sustainable sector”. ”.
This week, a different study on bitcoin’s climate impacts found that the proportion of fossil generation used to power proof-of-work was far higher than defenders claim.
The University of Cambridge’s bitcoin electricity consumption index has long tracked the estimated power consumption of the bitcoin network, but an update launched this month adds a new data set to the estimates: a “map mining”. This shows the geographical distribution of bitcoin miners.
By combining this data with previous studies of regional differences in electricity generation, the researchers were able to estimate the proportion of generation that is renewable.
“The results show that fossil fuels represent almost two-thirds of the total electricity mix (62.4%) and sustainable energy sources 37.6% (of which 26.3% are renewable energies and 11.3% of the nuclear)”, wrote Alexander Neumueller of Cambridge.
“The results therefore deviate significantly from industry findings which estimate the share of sustainable energy sources in Bitcoin’s electricity mix at 59.5%.”
However, even though the generational mix is still carbon-intensive, overall bitcoin issuance has declined over the past 12 months due to the sharp decline in the value of the cryptocurrency.
Bitcoin prices, and therefore advance payments to miners, have fallen by two-thirds, sending some out of business and leading others to scale back, reducing emissions by around 14% from 2021, estimates researchers.
These emissions are comparable to those of countries such as Nepal or the Central African Republic, according to the Cambridge team.