In 2021, the total global damages of all coins mined exceed $3.7 billion
Bitcoin mining caused climate damages amounting to $12 billion during 2016-2021, a new study estimated.
Carbon dioxide equivalent emissions from electricity production for Bitcoin mining rose 126 times to 113 tonnes in that period, according to the paper published in the Scientific Reports.
In 2021, the total global damages of all coins mined exceed $3.7 billion.
Mining Bitcoin is comparable to making energy-intensive products such as beef, natural gas and crude oil, the research showed.
“We find no evidence that Bitcoin mining is becoming more sustainable over time,” said Benjamin A Jones, associate professor at the University of New Mexico, in a statement.
Rather, it is becoming dirtier and more damaging to the climate over time, he highlighted, adding the cryptocurrency’s environmental footprint is moving in the wrong direction.
Miners worldwide compete to authenticate transactions between parties using energy-guzzling supercomputers. The first person to finish the job is rewarded with a Bitcoin.
Roughly 707 kilowatt hour (kWh) of electricity is consumed per transaction, according to Columbia Climate School.
The tremendous amount of electricity being used for mining or production of Bitcoin is mostly from fossil fuels, such as coal and natural gas, said Jones. “This is causing huge amounts of air pollution and carbon emissions, which is negatively impacting our global climate and our health.”
In this study, researchers calculated climate damages from Bitcoin mining. Next, they estimated climate damages from various sectors such as electricity, agriculture, meat, crude oil, vehicles and precious metals.
In 2020 alone, Bitcoin mining consumed 75.4 terawatt-hours of electricity (TWh), surpassing Austria’s 69.9 TWh that year, the analysis showed.
Bitcoin climate damages exceeded the price of the coins sold for more than one-third of the days in 2020, it added. From 2016-2021, climate damages for Bitcoin averaged 35 per cent of its market value, showed the study.
This share for Bitcoin was slightly less than 46 per cent for natural gas and 41 per cent for gasoline.
Climate damage for Bitcoin as a market value is more than that of beef production (33 per cent) and gold mining (4 per cent), the findings stated.
Determining the energy source powering Bitcoin mining operations is challenging due to a lack of data.
The share of renewable energy — solar, wind, hydropower — ranges from 25 per cent of mining’s total electricity to as high as 73 per cent.
China, once a global Bitcoin mining hotspot, was likely using significant amounts of renewable hydropower, the researchers speculated.
But the country banned all cryptocurrency mining in 2021. “This appears to have drastically altered the global share of renewables used by Bitcoin miners, resulting in increased use of fossil fuels,” they wrote in their study.
Further, Jones and his team considered a hypothetical scenario where 63 per cent of electricity came directly from renewables and nuclear energy.
Their analysis showed that climate damages in this scenario averaged 23 per cent of the coin’s price from 2016-2021.
“Even if Bitcoin miners obtained the majority of their electricity from renewables and directly carbon-free sources, there are still large and growing climate damages,” the researchers wrote in the paper.
The policy challenge in mitigating climate change is creating governance mechanisms for cryptocurrencies like Bitcoin, the authors recognised.
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