Bitcoin Mining’s Environmental Impact Rivals Meat Production, Oil Drilling: Study

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(Credit: rzoze19/Shutterstock)Concerns about cryptocurrency mining’s impact on the environment have been documented several times, but now we know just how harmful it really is. A study from New Mexico has found that the environmental damage produced by Bitcoin mining is comparable to beef production or oil refining.

As cryptocurrencies have grown in popularity, proponents of these digital assets have insisted that cryptomining is as important and lucrative as mining gold. In addition to simply advocating cryptomining in general, these statements are meant to quell any concerns about the downsides of cryptomining – especially those related to the environment. The bottom line is that even if cryptomining negatively affects the planet, digital development and economic gain are worth the environmental costs. But researchers at the University of New Mexico aren’t so sure.

Their study examines energy consumption in relation to Bitcoin mining, particularly because Bitcoin has long been the dominant proof-of-work currency. (Proof-of-stake currencies use far less energy, but few major cryptocurrencies operate under this model.) In 2020, Bitcoin miners used 75.4 terawatt hours (TWh) of electricity – more than the entire countries of Austria (69.9 TWh ) or Portugal (48.4 TWh) used in the same year. Not only does this put pressure on the energy grid, but all that excess energy has to come from somewhere. In a country like the USA, more than a quarter of this demand can be met by burning fossil fuels.

“While advocates have offered [Bitcoin] as representing ‘digital gold’, from a climate damage perspective, it functions more like ‘digital crude oil'”, the researchers write in their study, which was published last week in Nature Communications.

Between 2016 and 2021, there were several cases where Bitcoin was found to be more harmful to the climate than a single Bitcoin was financially worth. In 2016, CO2 equivalent emissions related to energy production in Bitcoin mining were 0.9 tonnes per coin; by 2021 this had increased 126 times to 113 tonnes per coin. A single Bitcoin can be associated with more than $10,000 in climate damage, and in May 2020, $1 USD of Bitcoin market value was associated with $1.56 in global climate damage. The argument that Bitcoin mining was economically worth its environmental costs had crumbled: the practice had officially matched beef production and oil refining for climate impact.

Despite all this, the study’s authors know that “digitally scarce goods” are not going anywhere. Instead of calling for Bitcoin mining to stop altogether, the researchers suggest a few changes to the crypto industry’s current practices. They recommend partially basing the market price on estimated climate damage: “BTC mining should not be ‘underwater’ where the climate damage per unit is greater than coin market prices for a significant period of time,” they write. Climate damage per unit can also be compared to a benchmark for the climate damage per unit market value of other goods, including “those that we regulate or consider unsustainable.”

These comparisons will not only help investors make more informed financial decisions, but also signal a need for regulatory action or production alternatives. Most importantly, Bitcoin mining’s impact on the environment should gradually decrease, not worsen, as the industry matures and more efficient mining methods (such as proof-of-stake) are discovered and adopted.

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