Researchers claim Bitcoin’s climate impact is closer to “digital crude oil” than gold

Bitcoin (BTC) bashing has continued unabated even in the depths of a bear market with more research questioning its energy use and environmental impact.

The latest paper by researchers at the Department of Economics at the University of New Mexico, published on September 29, argues that from a climate damage perspective, Bitcoin functions more like “digital crude oil” than “digital gold.”

The research attempts to estimate the energy-related climate damage caused by proof-of-work Bitcoin mining and make comparisons with other industries. It claims that between 2016 and 2021, on average, every $1 in BTC market value created was responsible for $0.35 in global “climate damage”, adding:

“As a share of market value, it’s in the range between beef production and crude oil burned like gasoline, and an order of magnitude higher than wind and solar power.”

The researchers conclude that the findings represent “a set of red flags for any assessment as a sustainable sector,” adding that it is highly unlikely that the Bitcoin network will become sustainable by switching to proof-of-stake.

“If the industry does not shift the production trajectory away from POW, or move towards POS, this class of digitally scarce goods may need to be regulated, and delays are likely to lead to increasing global climate damage.”

Recently, Lachlan Feeney, the founder and CEO of Australian-based blockchain development agency Labrys, told Cointelegraph after the merger that “the pressure is on” Bitcoin to justify the PoW system in the long term.

However, there are always counter-comparisons and arguments. The University of Cambridge currently reports that the Bitcoin network currently consumes 94 terawatt hours (TWh) per year. To put this into context, all the refrigerators in the US alone use more than the entire BTC network at 104 TWh per year.

Furthermore, transmission and distribution losses in the US alone are 206 TWh per year, which could power the Bitcoin network 2.2 times. Cambridge also reports that demand for Bitcoin network power has dropped by 28% since mid-June. This is likely due to miner capitulations during the bear market and more efficient mining hardware being adopted.

Related: Nic Carter takes aim at claims that Bitcoin is an environmental disaster

There is also the argument that more mining is now being done with renewable energy, especially in the US which has seen an influx of mining companies since China’s ban.

Earlier this month, former MicroStrategy CEO Michael Saylor hit out at “misinformation and propaganda” regarding the energy usage of the Bitcoin network. He pointed out that calculations show that nearly 60% of BTC mining energy comes from sustainable sources and energy efficiency has improved by 46% year-on-year.

Texas, which has become a mining mecca in recent years, is one example where renewable energy reigns supreme – it is the largest producer of wind power in the United States. Several mining operations are also set up to use excess or otherwise wasted energy as gas flaring. In August, Cointelegraph also reported that sustainable energy use for BTC mining has grown by nearly 60% in a year, so it’s not all doom and gloom.