The climate damage from Bitcoin mining became more than 125 times worse in just five years

Without a physical form, the digital currency Bitcoin can feel almost invisible to those who do not use it. However, its harmful climate impacts are all too real – and getting worse.

Emissions from cryptocurrency mining have skyrocketed, researchers recently reported in Scientific reports. From 2016 to 2021, the carbon footprint of mining a single Bitcoin multiplied a staggering 126 times. In that window, Bitcoin mining caused an estimated $12 billion in global climate damage.

“We find no evidence that Bitcoin mining is becoming more sustainable over time,” University of New Mexico economist Benjamin Jones said in a statement. “Rather, our results suggest the opposite: Bitcoin mining is getting dirtier and more damaging to the climate.” (Jones and his two co-authors declined interview requests from Mongabay.)

Large-scale commercial mining farms draw electricity to power hundreds or even thousands of computers in order to mine as competitively as possible. Photo by Marko Ahtisaari on Flickr and licensed under CC BY 2.0.

When someone buys or trades Bitcoin, computers in the network compete to solve a complex numerical puzzle. The winning computer then validates the transaction, giving its owner new Bitcoin. This process is called “mining”.

The computing power needed to mine Bitcoin, by far the world’s largest cryptocurrency by value, comes at a cost. Bitcoin in 2020 used 75.4 terawatt hours of electricity – more than the country of Austria. Most of the electricity comes from burning fossil fuels such as coal and natural gas, the researchers said.

To estimate the resulting climate impacts, Jones and his team analyzed how Bitcoin’s electricity demand fluctuated from 2016 to 2021. Based on where miners operate and how those locations produce electricity, they found that mining one coin in 2021 released 113 metric tons (111 .2 imperial tons). ) of carbon dioxide on average, up from just 0.9 tons in 2016. Assuming that each metric ton of carbon dioxide causes $100 in environmental damage—a figure similar to that used by other researchers—then each Bitcoin mined in 2021 distributed over 11,300 dollars in climate damages.

The trend arises from Bitcoin’s competitive “proof-of-work” mining system, the researchers said. As more miners join the fray and use more powerful computers to compete, power consumption increases. And to prevent these miners from generating new Bitcoin too quickly and lowering its value, an algorithm increases the difficulty of the mining tasks, requiring more electricity to solve them as time goes by.

Experts expect climate damage to continue as long as dirty fuels like coal remain cheap, especially given recent falls in Bitcoin’s value. The cryptocurrency fell from an all-time high of nearly $69,000 per coin in November 2021 to just over $16,500 per coin a year later.

“Miners will start moving from renewable energy to dirty energy, to coal power, just to increase their profit margin,” said finance professor Larisa Yarovaya at the University of Southampton, UK, who was not involved in the study.

Between 2016 and 2021, offsetting the climate damage by mining a Bitcoin would have cost 35% of the coin’s value on average. By this standard, Bitcoin ranks alongside unsustainable products like crude oil and beef.

However, judging Bitcoin’s climate damage relative to its value may not be the most reliable strategy.

“This is such a speculative resource,” said Giovanni Compiani, a professor of marketing at the University of Chicago who was not involved in the study. Bitcoin’s value, Compiani said, fluctuates dramatically and doesn’t always reflect the coin’s actual utility value — but mining always generates emissions.

Cryptocurrency doesn’t have to be so harmful, the authors noted. Ethereum, the second largest crypto network, recently adopted a “proof-of-stake”-system that randomly selects participants to process transactions. Unlike Bitcoin’s system, this approach eliminates competition between miners, reducing the number of computers at work at any given time. The move makes Ethereum less secure, but is likely to reduce energy usage by over 99.9%.

Switching to proof-of-stake would involve moving Bitcoin’s blockchain, the digital ledger that documents all transactions, to another system. The crypto giant has no incentive to attempt such a heavy engineering feat, Yarovaya said.

That leaves regulation. But when China banned cryptocurrency last year, many miners there moved to the United States and Kazakhstan – where they sourced a larger portion of their electricity from gas and coal power.

“If there is only a shift in activities from one country to another, then this does not really solve the problem,” Compiani said. “Ultimately, the emissions are global.” Creating a climate-friendly cryptoculture, he said, will require international coordination.

Citation:

• Jones, BA, Goodkind, AL and Berrens, RP (2022). Economic estimation of Bitcoin mining’s climate damage shows a closer resemblance to digital crude oil than digital gold. Scientific reports, 12(1), 1-10. doi:10.1038/s41598-022-18686-8

Sean Cummings (@SciNonficSean) is a graduate student in the Science Communication Program at the University of California, Santa Cruz. Other Mongabay stories produced by UCSC students can be found here.