Bitcoin can be as bad for the planet as beef

Bitcoin mining’s climate impact is comparable to raising cattle or burning gasoline when taken as a proportion of market capitalization, 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 planet-warming fossil fuels. The climate-related economic damage caused by mining the popular digital token, bitcoin, exceeded its market value on 6.4% of the days it traded between 2016 and 2021, the paper published in Scientific Reports found on Thursday.

The study calculated the climate costs of mining bitcoin against its average market price, comparing it to other commodities such as crude oil, gold or beef. This means that the results do not reflect total emissions from these industries, which would be far greater, but their relative impact.

The climate impact of gold mining, to which bitcoin is often compared, is just 4% of the 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 grown as the cryptocurrency market has matured, which questions the sector’s general sustainability.

“While proponents have offered (bitcoin) as representing ‘digital gold’, from a climate damage perspective it functions more like ‘digital crude oil,'” the researchers said, signaling the need to find more efficient ways to produce tokens, or to increase regulation.

Bitcoin mining, which represents about 41% of the global cryptocurrency market, consumed more energy than was used to power entire countries like Austria or Portugal in 2020. The mining of bitcoin, ether, litecoin and monero coins generated 3 to 15 million tonnes of carbon dioxide emissions from January 2016 to June 2018, according to research cited by the paper. This corresponds to the emissions from Afghanistan, Slovenia or Uruguay in 2018.

Bitcoin’s carbon footprint also grows over time because, in order to mine new coins, more 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 use is increasing.

That’s why a bitcoin mined in 2021 would have emitted about 113 tonnes of CO2 equivalents – 126 times more than 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 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, shrinking profit margins from bitcoin mining have pushed miners to operate more efficient machines — a move that has resulted in a drop in greenhouse gas emissions from the industry, according to 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 increasing their efforts to source a greater proportion of the energy they use from renewable sources such as geothermal energy, water, solar and wind. Researchers at the University of Albuquerque ran a simulation and concluded that if renewable energy such as wind and solar had represented 88.4% of the total amount of power used to mine bitcoin between 2016 and 2021, climate damage would have dropped to just 4% of the average market price.

Another way to reduce the climate impact is to switch to another mechanism for verifying transactions – and producing coins. Ether, the second-largest cryptocurrency, moved this year to a mechanism called Proof of Stake, which the study said should reduce its estimated energy use by more than 99%.