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.
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."
