Production of cryptocurrency units like Bitcoins is often referred to as ‘mining.’ This is a metaphor: the coins are actually secured via computers solving algorithms. But this process has real-world impacts. Each $1 of Bitcoin value created in 2018 was responsible for $0.49 in health and climate damages in the U.S. and $0.37 in China, researchers report in a new study.
The reason is that cryptocurrency mining uses a lot of electricity. Moreover, because of the way most cryptocurrencies are structured, the more coins that have already been produced, the harder the mining algorithms are to solve — so the electricity requirements are constantly increasing, along with the associated damages.
Last year, researchers calculated the electricity use and corresponding carbon emissions for four of the most prominent cryptocurrencies: Bitcoin, Ethereum, Litecoin, and Monero. They found that Bitcoin mining alone used more electricity in 2017 than did all of Ireland or Hong Kong. Between the start of 2016 and mid-2018, the four cryptocurrencies together were responsible for between 3 and 15 million tonnes of carbon dioxide emissions.
The new study builds on those findings. Researchers at the University of New Mexico in Albuquerque first collected data on emissions of various pollutants associated with each kilowatt hour of electricity generation in the United States and China, two countries where a lot of cryptocurrency mining occurs. They used this to calculate the health and climate impacts – which they term ‘cryptodamages’ – per coin created.
Their estimate of climate damage is based on carbon dioxide emissions associated with electricity production. The estimate of health damages is based on exposure to fine particulate matter known as PM2.5, nitrogen oxides, and sulfur dioxide, all of which are known to increase the risk of premature mortality. In some cases they extrapolated from more extensive U.S. data to make estimates for China.
In 2018, “the human health and climate damages caused by Bitcoin represented almost half of the financial value of each U.S. dollar of Bitcoin created,” the researchers write in the journal Energy Research & Social Science.
In China, climate change accounts for about 89% of cryptodamages, while the remaining 11% are due to human health effects. In the United States, about 60% of cryptodamages represent climate impacts and 40% health impacts.
This is because emissions associated with electricity production are higher in China than in the United States, but a measure that represents the economic losses from premature death is much lower (reflecting lower wages in China).
In fact, cryptocurrency mining in China takes a heavy toll in premature mortality. Every 50,000 Bitcoins mined in China are associated with 12 additional deaths due to particulate matter exposure, the researchers calculated.
Over time, the amount of electricity required to produce cryptocurrency coins has increased and the value of those coins has fluctuated. This means that mostly, the net benefit of cryptocurrencies to society has been eroding. In December 2018, damages from Bitcoin mining in the United States amounted to $0.95 for every $1 value of the coins.
It’s well known that, because of the ever-increasing effort required to mine coins, at some point a given cryptocurrency will no longer be profitable to mine. The researchers argue that it’s likely that the cryptocurrency’s social costs will outstrip its value well before that point of unprofitability.
Cryptocurrency miners tend to locate in areas with cheap electricity. But the cheapest electricity isn’t necessarily associated with the lowest environmental and health damages. And it’s hard to regulate and tax cryptocurrency mining in a way that would hold miners accountable for these damages. The development of new systems of cryptocurrency that aren’t so energy intensive could be a way to resolve this problem, the researchers suggest.
Source: Goodkind A.L. et al. “Cryptodamages: Monetary value estimates of the air pollution and human health impacts of cryptocurrency mining.”Energy Research & Social Science2019.
Image: Based on artwork by David & Angie.
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FAQs
Every 50,000 Bitcoins mined in China are associated with 12 additional deaths due to particulate matter exposure, the researchers calculated. Over time, the amount of electricity required to produce cryptocurrency coins has increased and the value of those coins has fluctuated.
What are the environmental impacts of cryptocurrency mining? ›
Some of environmental impacts triggered by the cryptocurrency mining can be expressed as the high electricity consumption, the increased carbon footprint and the generation of the electronic waste.
Is crypto actually bad for the environment? ›
UN Study Reveals the Hidden Environmental Impacts of Bitcoin: Carbon is Not the Only Harmful By-product. Global Bitcoin mining is highly dependent on fossil fuels, with worrying impacts on water and land in addition to a significant carbon footprint.
What is the danger of crypto mining? ›
Security vulnerabilities.
Cryptocurrency miners may be vulnerable to different types of security risks. Hacking, malware, and cyberattacks can grant unauthorized access to a miner's equipment, resulting in the theft of mining rewards and confidential data.
How does cryptocurrency compare to carbon footprint? ›
For example, the carbon footprint of one Bitcoin transaction is often compared to driving a gas-powered sedan for over 500 miles. Every Bitcoin transaction has the same carbon footprint as 1.4 million Visa transactions.
How does mining cryptocurrency contribute to climate change? ›
Some crypto-assets like bitcoin have a significant carbon footprint, with an annualised energy consumption estimated to be similar to that of some mid-sized countries. The main reason for this outsized carbon footprint lies in their underlying blockchain technology, which requires vast amounts of computational power.
What are 4 impacts of mining on the environment? ›
Mine exploration, construction, operation, and maintenance may result in land-use change, and may have associated negative impacts on environments, including deforestation, erosion, contamination and alteration of soil profiles, contamination of local streams and wetlands, and an increase in noise level, dust and ...
Why is Ethereum bad for the environment? ›
Ethereum currently has over 800,000 validators running computers and consuming electricity – more than twice the number since the Merge. While each validator may be consuming less electricity than pre-Merge, the sharp increase in the number of validators can contribute to increased total electricity usage.
How much water does crypto mining use? ›
In 2021, Bitcoin mining consumed over 1,600 gigaliters (GL) of water worldwide. In the United States, Bitcoin mining consumes about 93 GL to 120 GL of water every year, equivalent to the average water consumption of 300,000 U.S. households or a city like Washington, D.C.
Why are NFTs and crypto bad for the environment? ›
Because blockchains use energy, NFTs can contribute to greenhouse gas emissions and climate change through their production, exchange, and storage.
In fact, cryptocurrency mining in China takes a heavy toll in premature mortality. Every 50,000 Bitcoins mined in China are associated with 12 additional deaths due to particulate matter exposure, the researchers calculated.
Does crypto mining pollute? ›
Indeed, mining for bitcoin and other cryptocurrencies is antithetical to climate progress. This is due to the technologies' massive energy needs and resulting pollution. Understanding these issues and why activists and legislators are pushing for change is important for anyone concerned with ensuring a livable planet.
Is crypto mining still beneficial? ›
With the right setup, Bitcoin mining is profitable. However, there is no definitive way to know how much money you will make from Bitcoin mining. This is because there are many variables that can determine profitability. For a start, you'll need to purchase Bitcoin mining equipment – known as ASICs.
Is crypto worse for the environment than cash? ›
But cryptocurrency requires energy, equipment, internet, and a global networking infrastructure to be useful. Thus, it has a large environmental impact, with some using as much energy as small countries to maintain a blockchain. There are even concerns about cryptocurrency's water footprint.
How is cryptocurrency related to climate change? ›
The clean energy advocacy group RMI estimates that U.S. cryptocurrency operations release 25 million to 50 million tons of CO2 every year. That's the same amount as the annual diesel emissions of the U.S. railroad industry.
What is the greenest cryptocurrency? ›
Below we outline five cryptocurrencies that are more environmentally friendly than bitcoin.
- Hedera Hashgraph. Hedera is a “decentralized, open-source, proof-of-stake public ledger”, according to its website. ...
- IOTA. IOTA's technology does not require miners. ...
- Cardano. ...
- Nano. ...
- Solarcoin.
Mining is an inherently invasive process that can cause damage to a landscape in an area much larger than the mining site itself. The effects of this damage can continue years after a mine has shut down, including the addition to greenhouse gasses, death of flora and fauna, and erosion of land and habitat.
How is crypto mining eco friendly? ›
In contrast, green crypto mining draws power from renewable energy sources such as solar power, hydroelectric power, and nuclear energy that emit little or no carbon.
Is bitcoin mining a waste of resources? ›
Subsequently, global BTC mining emitted more than 85.89 Mt of CO2eq from 2020 to 2021, equivalent to carbon emissions from 84 billion pounds of coal burned, 190 natural gas-fired power plants, or over 25 million tons of landfilled waste.
What are some of the environmental effects of NFTs and cryptocurrency? ›
Non-fungible tokens (NFTs) and ordinals are assets that are tokenized using a blockchain. Because blockchains use energy, NFTs can contribute to greenhouse gas emissions and climate change through their production, exchange, and storage.
