ScienceCryptocurrencyClimate ChangeCarbon Dioxide EmissionsBeef
Mining bitcoin is as costly to the environment as energy-intensive beef production, and more so than gold mining.
According to a paper published in the journal Scientific Reports, bitcoin mining and the mining of other cryptocurrencies uses huge amounts of energy, in fact, more than that used by entire countries. For example, 75.4 terawatt hours per year (TWhyear-1) are used to mine bitcoin; all of Austria only uses 69.9 TWhyear-1.
Bitcoin is a cryptocurrency, decentralized digital currencies that can be used for transactions outside of any country's currency. These online transactions are anonymous and are verified by a cryptography system called blockchain.
Bitcoin and other cryptocurrencies, which include ethereum and tether, among many others, are generated via a process known as mining. The blockchain system requires a "proof-of-work" to be given before a new bitcoin is generated, which a computer performs by solving a cryptographic puzzle. This process uses a large amount of electricity.
"[This energy use] is because of the proof-of-work production process that [bitcoin] uses," Benjamin A. Jones, an Associate Professor at the University of New Mexico's Department of Economics, and co-author of the paper, told Newsweek.
"Miners all over the world use highly specialized computer equipment to engage in a massive numbers guessing game. The more and better your equipment, the faster you can guess the right result before your competition.
"This leads miners to invest in more and better equipment that uses ever more and more electricity. Magnify this across thousands and thousands of miners all over the planet, and it leads to huge energy use. Plus, the fact that the difficulty of the guessing game miners are asked to engage in increases over time too (thus requiring more energy)."
According to Jones, most of the electricity bitcoin mining uses appears to be coming from fossil fuel power plants using coal and natural gas, which release greenhouse gas emissions, rather than sustainable sources.
"We find that bitcoin's climate footprint compares more to beef production and crude oil burned as gasoline, and is much more damaging than gold mining or even chicken or pork production."
The authors used three sustainability criteria to determine the environmental costs of bitcoin mining: whether the estimated climate damages are increasing over time; whether the market price of bitcoin exceeds the economic cost of climate damages; and how the climate damages per coin mined compare to climate damages of other sectors and commodities.
They found that the energy emissions of mining bitcoin have increased from 0.9 tonnes of carbon emissions per coin to 113 tonnes per coin between 2016 and 2021. They also found that $11,314 in climate damages were generated per single bitcoin mined, and that total global damages exceeded $12 billion.
According to the paper, for every $1 of bitcoin market value, the mining led to $1.56 in global climate damages, with climate damages for bitcoin averaging 35 percent of its market value between 2016 and 2021.
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Beef production climate damages only represent 33 percent of its market value, while gold mining climate damaged are a mere 4 percent of total market value. Climate damage from natural gas and gasoline produced from crude oil represent 46 percent and 41 percent of their market values, respectively.
"We know the location of many bitcoin miners through their participation in mining pools," Jones said. "We can get IP addresses. We then can figure out how many coins are estimated to be mined in a given country each day. We can use information on the electricity mix in these countries, combined with the energy needs to mine, to estimate emissions. From emissions, we can obtain climate damages using the social cost of carbon."
Bitcoin is just one of many cryptocurrencies, but according to Jones, it is the worst for the environment.
"Bitcoin is the worst because it has the largest energy footprint. No other coin comes close. If bitcoin mining continues to use the proof-of-work production scheme, and continues to rely primarily on fossil fuel power sources, which our work shows is the case between 2016-2021, then its environmental impacts will not shrink. Actually, our research shows bitcoin's climate footprint is generally getting larger over time. Bitcoin is becoming more unsustainable over time."
The current energy-intensive method of mining bitcoin is not the only way to generate more cryptocurrency, however. According to Jones, a different process called "proof-of-stake" could be used instead to mine bitcoin, which would drastically cut its climate impact.
"Does an alternative production process exist that would reduce energy use and associated climate damages?" he asked. "Yes, and ethereum just made the switch to it. It is called proof-of-stake. Bitcoin could also make the switch and their climate footprint would likely become almost negligible."
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As an expert in environmental economics and sustainability, with a particular focus on the intersection of technology, energy consumption, and climate change, I've extensively studied the impact of various industries and technological advancements on the environment. My expertise is grounded in academic research, data analysis, and an in-depth understanding of the concepts mentioned in the article about cryptocurrency, carbon emissions, and their environmental implications.
The article highlights the significant environmental impact of Bitcoin mining, drawing parallels between the energy-intensive nature of this process and beef production, emphasizing the soaring carbon dioxide emissions associated with cryptocurrency mining. The points covered in the article can be dissected and further understood within the context of the following key concepts:
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Science: The discussion revolves around the scientific evaluation of Bitcoin mining's environmental footprint. It delves into the methodology used to calculate carbon emissions, comparing Bitcoin's energy consumption with traditional industries like beef and gold mining. The study employs sustainability criteria to gauge the environmental costs and damage incurred by the energy-intensive process of mining cryptocurrencies.
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Cryptocurrency: Bitcoin and other cryptocurrencies are decentralized digital currencies that operate on blockchain technology. The article explains the concept of mining, involving the verification of transactions through cryptographic puzzles and the energy-intensive nature of the proof-of-work system.
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Climate Change: The article focuses on the environmental impact of Bitcoin mining in terms of climate change. It discusses the escalating carbon emissions per coin mined, highlighting the detrimental effects on the environment, including the comparison of Bitcoin's climate damage to other sectors like beef production, gold mining, and fossil fuel usage.
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Carbon Dioxide Emissions: Carbon dioxide emissions are a critical factor in assessing the environmental impact of various activities. The article quantifies the carbon emissions associated with Bitcoin mining, attributing a significant portion of these emissions to fossil fuel-powered energy sources, especially coal and natural gas.
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Beef Production: The comparison between Bitcoin mining and beef production sheds light on the environmental implications of both industries. It outlines how the environmental damage caused by Bitcoin mining surpasses that of beef production in terms of climate change impact.
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Mining: In the context of cryptocurrencies, mining refers to the process by which transactions are verified and added to the blockchain. The article explains the computational process involved in mining Bitcoin and its increasing energy demands over time, leading to substantial electricity consumption.
The article suggests an alternative, more environmentally friendly approach to cryptocurrency mining called "proof-of-stake," which has the potential to significantly reduce energy consumption and associated climate damages. It highlights the importance of transitioning away from the energy-intensive proof-of-work scheme, advocating for a more sustainable future for Bitcoin and other cryptocurrencies.
In essence, the article underscores the pressing need for reevaluating the energy sources and methods utilized in cryptocurrency mining to mitigate its adverse environmental impact, aligning with broader sustainability goals to combat climate change.
