Study shows that Bitcoin has a greater impact on the climate than gold mining

Bitcoin is less “digital gold” and more “digital beef,” according to a study that suggests the cryptocurrency has a bigger impact on climate than gold mining and on levels of natural gas extraction or livestock.

The University of New Mexico study, published in the journal Scientific Reports, evaluated the climate costs of various commodities as a part of their total market capitalization.

Some, like coal, have been analyzed to cause almost as much damage as the entire value of the market they support, a 95% ratio. Other commodities, like pork production, cause huge climate impacts in absolute terms, but only because the market is so huge.

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However, Bitcoin lies between the two. According to the economists, the climate damage from the digital currency’s production has averaged 35% of its market value over the past five years, peaking at 82% in 2020.

That compares to beef, which hurts 33% of its market, or natural gas, which hits 46%. And it’s far more than gold, the commodity to which cryptocurrency supporters compare it most, which has a climate impact of just 4% of its market value thanks to its massive aggregate value that dwarfs the huge environmental impact of its extraction.

The digital currency’s disproportionate damage to the climate stems from its reliance on a computational technique to verify transactions called “proof-of-work mining,” which requires huge amounts of electricity to participate, eroding those doing it , be rewarded with a chance to win something new Bitcoin.

On more than one day out of 20 in the period studied, the climate damage from these “bitcoin miners” exceeded the value of the coins produced, largely due to this power consumption.

Some have argued that renewable energy could meet that need, but the authors wrote that for every dollar of value added, the climate damage for bitcoin is 10 times worse than for wind and solar power – which “sets a bunch of red flags for any consideration as a sustainable sector.” represents”.

This week, another study on Bitcoin’s climate impact found that the percentage of fossil generation used for proof of work was far higher than proponents claimed.

Cambridge University’s Bitcoin Electricity Consumption Index has long tracked the estimated electricity consumption of the Bitcoin network, but an update released this month adds a new data set to the estimates: a “mining map”. This shows the geographical distribution of bitcoin miners.

By combining this data with previous studies on regional differences in electricity generation, the researchers were able to estimate the share of renewable electricity generation.

“The results show that fossil fuels account for almost two-thirds of the total electricity mix (62.4%) and sustainable energy sources for 37.6% (of which 26.3% renewables and 11.3% nuclear),” wrote Alexander Neumueller of Cambridge .

“The results differ significantly from industry findings, which estimate the share of sustainable energy sources in Bitcoin’s electricity mix at 59.5%.”

Although the generation mix is ​​still carbon-intensive, Bitcoin’s total emissions have fallen over the past 12 months due to the cryptocurrency’s sharp decline in value.

Bitcoin prices, and with it expected payouts to miners, have fallen by two-thirds, prompting some to halt operations and prompting others to scale back activities, reducing emissions by about 14% from 2021 levels, the researchers estimate .

Those emissions are comparable to those of countries like Nepal or the Central African Republic, the Cambridge team says.

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