Bitcoin has ‘extremely disturbing’ impact on climate change, report says

Bitcoin’s environmental impact is worsening and although it is often compared to “digital gold”, its creation is more comparable to the impacts of extracting and refining crude oil, researchers from the University of New Mexico (UNM).

As of December 2021, Bitcoin had a market capitalization of around $960 billion, with around 41% global market share among cryptocurrencies. Although known to be energy-intensive, the extent of Bitcoin’s climate damage is unclear.

In a new report, researchers have estimated that in 2020 Bitcoin mining used 75.4 terawatt hours of electricity (TWh) – more electricity consumption than Austria (69.9 TWh). ) or Portugal (48.4 TWh) that year.

“We find no evidence that Bitcoin mining becomes more sustainable over time,” said UNM professor Benjamin A. Jones. “On the contrary, our results suggest the opposite: Bitcoin mining becomes dirtier and more climate-damaging over time. In short, Bitcoin’s environmental footprint is moving in the wrong direction.

“Globally, the mining or production of Bitcoin uses huge amounts of electricity, mostly from fossil fuels, such as coal and natural gas. This causes huge amounts of air pollution and carbon emissions, which negatively impact our global climate and health.”

He added, “We find several instances between 2016 and 2021 where bitcoin is more damaging to the climate than a single bitcoin is actually worth. In other words, Bitcoin mining, in some cases, creates climate damage greater than the value of a coin. This is extremely troubling from a sustainability perspective.

The authors assessed Bitcoin’s climate damage according to three sustainability criteria: whether the estimated climate damage increases over time; whether Bitcoin’s weather damage exceeds the market price, and how weather damage as a share of the market price compares to other sectors and commodities.

They found that CO2 equivalent emissions from power generation for Bitcoin mining increased 126-fold, from 0.9 tonnes per coin in 2016 to 113 tonnes per coin in 2021.

Calculations suggest that each bitcoin mined in 2021 generated $11,314 in climate damage, with total global damage exceeding $12 billion between 2016 and 2021.

The damage peaked at 156% of the coin price in May 2020, suggesting that every dollar of Bitcoin market value generated resulted in $1.56 in global weather damage that month.

“Across the class of rare digital assets, we focus on cryptocurrencies that rely on proof-of-work (POW) production techniques, which can be very energy-intensive,” said Robert Berrens, professor of economics at UNM.

Ethereum, for example, recently evolved into a proof-of-stake model that, by some measure, reduces network carbon emissions by more than 99%.

The report estimated that climate damage for Bitcoin averaged 35% of its market value between 2016 and 2021. This share for Bitcoin was slightly lower than climate damage as a share of the market value of electricity generated by gas. (46 percent) and gasoline produced from crude oil (41 percent), but more than beef production (33 percent) and gold mining (4 percent) .

In July this year, European Union officials reached agreement on what will likely be the first major regulatory framework for the cryptocurrency industry.

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Teresa H. Sadler