According to researchers at the University of New Mexico in Albuquerque, the climate impact of Bitcoin mining is comparable to raising cattle or burning gasoline when taken as a proportion of value Merchant.
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 warm the planet. The climate-related economic damage caused by the mining of the popular digital token, bitcoin, exceeded its market value for 6.4% of the days it traded between 2016 and 2021, according to the article published Thursday in Scientific Reports.
The study calculated the climate cost of bitcoin mining relative to its average market price and compared it to other commodities like crude oil, gold or beef. This means that the results do not reflect the total emissions of these industries, which would be much larger, but their relative impact.
The climate impact of gold mining, which bitcoin is often compared to, is only 4% of its average market price in an average year, compared to 35% for the world’s most popular cryptocurrency. between 2016 and 2021. And the environmental impact has increased as the cryptocurrency market has matured, calling into question the overall sustainability of the sector.
“While proponents have proposed (bitcoin) as representing ‘digital gold,’ from a climate damage perspective, it functions more like ‘digital crude,'” the researchers said, noting the need to find more efficient ways to produce the tokens, or to increase regulation.
Mining bitcoin, which accounts for around 41% of the global cryptocurrency market, consumed more energy than was used to power entire countries like Austria or Portugal in 2020. Mining bitcoin, ether, litecoin and monero coins generated 3-15 million metric tons. carbon dioxide emissions from January 2016 to June 2018, according to research cited by the article. This is equivalent to the emissions of Afghanistan, Slovenia or Uruguay in 2018.
Bitcoin’s carbon footprint also increases over time because, to mine new coins, multiple miners compete to verify transactions on the blockchain. The fact that an ever-increasing number of miners are competing to solve increasingly difficult operations means that overall energy consumption is increasing.
This is why one bitcoin mined in 2021 would have emitted around 113 metric tons of CO2 equivalent – 126 times more than one bitcoin mined in 2016, according to the researchers. The paper estimates the economic value of these damages at $11,314 for a single bitcoin mined last year, while the value of total climate damage generated by all bitcoins mined between 2016 and 2021 could have been as high as $12 billion.
In recent months, falling profit margins from bitcoin mining have pushed miners to use more efficient machines — a move that has led to lower greenhouse gas emissions from the industry, according to a researcher. another report earlier this week. Emissions this year are estimated to be 14.1% lower than in 2021, representing about 0.1% of human emissions globally and about half of what gold miners generate in absolute terms.
Cryptocurrency miners are also stepping up their efforts to get more of the energy they consume from renewable sources like geothermal, hydro, solar, and wind. Researchers from the University of Albuquerque ran a simulation and concluded that while renewables like wind and solar accounted for 88.4% of the total amount of energy used to mine bitcoin between 2016 and 2021, weather damage would have dropped to just 4% of the average market. the price.
Another way to reduce climate impact is to switch to a different mechanism for verifying transactions – and producing coins. Ether, the second-largest cryptocurrency, this year transitioned to a mechanism called Proof of Stake, which the study found should reduce its estimated power consumption by more than 99%.