The story at a glance
- Online cryptocurrencies can use a huge amount of energy.
- To better estimate the environmental impacts of bitcoin mining, researchers assessed its value as the “social cost of carbon”.
- The damage caused by Bitcoin’s carbon dioxide emissions is similar to that inflicted by the cattle industry and the burning of crude oil.
New research puts Bitcoin’s climate damage on par with pollution from the beef production industry and crude oil being burned as gasoline, suggesting the cryptocurrency could worsen climate change if the status quo continues. continues.
The findings, published in Scientific Reports, include estimates of energy-related climate damage from mining Bitcoin, a popular cryptocurrency first created in 2009.
Using a metric known as the social cost of carbon, researchers found that between 2016 and 2021, every dollar of Bitcoin market value created was responsible for $0.35 of global climate damage, falling between that measured for beef production ($0.33) and crude oil burned as gasoline ($0.41).
They also found that as the industry matured, weather damage per coin increased rather than decreased, and at times Bitcoin weather damage exceeded the price of each coin created.
The $0.35 damage created by Bitcoin is also higher than wind and solar power, but lower than electricity generated from coal.
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“Taken together, these results represent a set of sustainability red flags,” the authors wrote. “While proponents have proposed Bitcoin as representing ‘digital gold’, from a climate damage perspective it functions more like ‘digital crude’.”
In 2020 alone, Bitcoin mining used more electricity than the whole country, Austria or Portugal.
Compared to 2016 rates, in 2021 one bitcoin mined emitted 126 times the carbon dioxide equivalent on average into the atmosphere, rising from 0.9 to 113 tons per coin.
Additionally, “each bitcoin mined in 2021 resulted in an average of $11,314 in climate damage, with the total global damage of all coins mined in 2021 exceeding $3.7 billion,” the authors wrote. Bitcoin’s total global climate damage was estimated at $12 billion between 2016 and 2021.
The social cost of carbon takes into account the damaging factors resulting from the emission of an additional ton of carbon dioxide into the atmosphere. These can include agricultural and labor productivity losses and destruction caused by sea level rise.
Previous research has estimated that the majority of the electricity used to mine cryptocurrencies like Bitcoin comes from fossil fuels, while an average of 39% comes from renewable energy sources.
In the analysis, the researchers used a social cost of carbon measured at $100 per ton to determine their estimates.
However, different totals for this cost have been proposed, and the current US government value is $51 per ton in 2020 dollars.
When the researchers tested several social costs of carbon values in their models, the climate damages from Bitcoin mining increased again significantly from 2016 to 2021 and followed a continuous upward trajectory.
Additional models showed increased use of renewable sources to generate electricity, resulting in reduced associated climate damage for each room. However, even in a high renewable energy scenario, “climate damage still averages 23% of the price per coin (2016-2021), despite miners only using 37% of their electricity from fossil fuels. “, warned the authors.
The study only measured environmental damage and did not assess any health-related costs associated with Bitcoin, meaning sustainability ratings could be worse than advertised.