According to an analysis by academics at The University of New Mexico that
was published in Scientific Reports, the climate change effects of mining
the digital currency Bitcoin are more equivalent to those of extracting and
refining crude oil than they are to mining gold.
According to the authors, Bitcoin should be compared to considerably more
energy-intensive goods like meat, natural gas, and crude oil rather than
being likened to "digital gold."
According to UNM Economics Associate Professor Benjamin A. Jones, "We find
no indication that Bitcoin mining is getting more sustainable over time."
Our findings, however, support the notion that bitcoin mining is really
growing dirtier and more harmful to the environment over time. In other
words, the environmental impact of Bitcoin is declining.
Bitcoin had a market worth of over 960 billion US dollars in December 2021
and held about 41% of the worldwide cryptocurrency market. Although
recognized to be energy-intensive, it's unknown how much harm Bitcoin is
doing to the environment.
Between January 2016 and December 2021, Jones and colleagues Robert Berrens
and Andrew Goodkind give economic estimations of the climatic impacts caused
by Bitcoin mining. According to their data, the mining of Bitcoin consumed
75.4 terawatt hours (TWh) of power in 2020, which is more than Portugal
(48.4 TWh) or Austria (69.9 TWh) combined.
"Bitcoin mining, or production, requires enormous quantities of power, the
majority of which is derived from fossil fuels like coal and natural gas.
Huge amounts of air pollution and carbon emissions are being produced as a
result, which is bad for both our health and the environment, according to
Jones. Between 2016 and 2021, we discover multiple occasions when Bitcoin is
more harmful to the environment than a single bitcoin is truly worth. To put
it another way, there are some cases where climatic harm caused by Bitcoin
mining exceeds the worth of the currency. From the standpoint of
sustainability, this is very concerning.
Three sustainability criteria were used by the authors to evaluate the
climate damages associated with Bitcoin: if they are expected to rise over
time; whether they surpass the market price; and how they compare to those
associated with other industries and commodities.
They discover that from 0.9 tonnes per coin in 2016 to 113 tonnes per coin
in 2021, the CO2 equivalent emissions from energy generation for Bitcoin
mining have surged 126-fold. According to calculations, each Bitcoin
produced in 2021 caused 11,314 USD in climate damages, totaling more than 12
USD in losses globally between 2016 and 2021. In May 2020, damages reached
at 156% of the coin price, indicating that for every $1 in Bitcoin market
value created that month, $1.56 in climate damages were also
generated.
According to Regents Professor of Economics Robert Berrens, "our focus is
on those cryptocurrencies that rely on proof-of-work (POW) production
procedures, which may be quite energy-intensive." "Creating governance
structures for an emerging, decentralized economy, which includes
energy-intensive POW cryptocurrency, is a policy problem within wider
measures to reduce climate change. We think that concrete, empirical
evidence of possibly irreversible financial impacts from climate change
would support such initiatives.
Finally, the authors compared the climatic damages caused by Bitcoin to
those caused by other businesses and goods, including the production of
power from renewable and non-renewable sources, the processing of crude oil,
the production of agricultural meat, and the mining of precious metals.
Between 2016 and 2021, Bitcoin suffered average climate losses of 35% of its
market value. This percentage for Bitcoin was higher than that of beef
production (33%) and gold mining (4%), but it was somewhat lower than the
climate damages as a percentage of the market value of electricity generated
by natural gas (46%) and gasoline generated by crude oil (41).
The authors come to the conclusion that none of the three major
sustainability criteria they looked at Bitcoin against were met. If
proof-of-work mining is not switched off voluntarily, as it recently was for
the cryptocurrency Ether, then possible legislation may be needed to make
Bitcoin mining sustainable.
