A recent study has found that the cryptocurrency has a greater climate impact than gold mining, equivalent to the effects of natural gas extraction or livestock farming for meat. The well-known cryptocurrency Bitcoin causes more environmental damage than beef production and has impacts nearly similar to crude oil, according to American researchers. The new analysis conducted by researchers from the University of New Mexico suggests that Bitcoin is potentially unsustainable and may have catastrophic social and environmental consequences in the future, as stated in a research paper published in the journal Scientific Reports.
From 2016 to 2021, greenhouse gas emissions equivalent to carbon dioxide from Bitcoin production rose from less than one metric ton to 113 tons. Every Bitcoin mined in 2021 is estimated to have caused climate damage worth $11,315, amounting to approximately $3.7 billion for that year alone. To put this into perspective, researchers compared cryptocurrency mining to other energy-intensive activities.
Bitcoin represents a multi-billion-dollar industry, and over the five-year study period, the average climate damage was found to be 35% of its market value. This means that if you take one US dollar worth of Bitcoin, about 35 cents of that dollar corresponds to climate damages. The climate damage from Bitcoin per dollar was slightly less than from natural gas (46 cents per dollar), and gasoline from crude oil (41 cents per dollar), but slightly more than the damage from beef production (33 cents) and significantly higher than the damage from gold mining (4 cents). None of these activities are currently considered sustainable.
Environmental economist Benjamin Jones from the University of New Mexico and his colleagues wrote in their research paper: “While Bitcoin proponents regularly present it as a kind of digital gold from a climate damage perspective, the cryptocurrency behaves more like digital crude oil.” For Bitcoin to genuinely be considered a sustainable currency, its climate damage must decrease over time as the technology matures and becomes more efficient. However, these new calculations show that this is not happening.
Bitcoin mining itself relies on a massive growth in computing power, which in turn significantly increases electricity demand. For example, in 2020, Bitcoin mining consumed more energy than the entire energy use of Austria or Portugal that same year. Like many other cryptocurrencies, Bitcoin relies on a proof-of-work (PoW) mining method that is energy-intensive to provide cryptographic verification of funds in the public ledger.
On more than one day out of 20 during the period studied, the climate damage from Bitcoin mining exceeded the value of the produced coins, largely due to electricity consumption. Some have argued that renewable energy sources could meet this demand, but researchers noted that the climate damage per dollar of value created was ten times worse for Bitcoin compared to wind and solar energy generation, which serves as a “set of warning signs accompanying the consideration of this sector as sustainable.”
