·The authors of the study believe that Ethereum "merger" is a potential solution to improve the sustainability of cryptocurrencies. If Bitcoin makes a similar update, the climate damage it estimates in this study will likely become negligible.
"Scientific Report" under Nature published a new study on September 29 saying that the environmental cost of mining of crypto digital currency Bitcoin is close to that of producing beef.
Research analysis says that between 2016 and 2021, every dollar of Bitcoin market value generated an average of 35 cents of global climate damage. For comparison, gasoline produces 41 cents and beef production produces a loss of 33 cents. Bitcoin is often compared to gold when considering economic value and environmental impacts, but the new study found that Bitcoin’s climate damage is actually 8.75 times that of gold.
The vast majority of the energy consumed by Bitcoin is used to verify transactions and “mine” new coins. In December 2021, Bitcoin's US dollar market value was close to US$960 billion, accounting for about 41% of the global market share of cryptocurrencies. Although Bitcoin is known to be highly energy-intensive, the degree of climate damage to Bitcoin has been unclear.
study authors pointed out that in 2020, the energy use of Bitcoin mining was 75.4 terawatt hours per year (TWhyear-1), which is higher than that of Austrian (69.9 TWhyear-1) or Portugal (48.4 TWhyear-1).
The author evaluated Bitcoin’s climate damage based on three sustainability indicators: whether the estimated climate damage increases over time; whether the Bitcoin market price exceeds the economic cost of climate damage; and the climate damage for each bitcoin mined compared to the climate damage of other industries and commodities.
study authors estimate the overall electricity consumption of Bitcoin and the resulting carbon dioxide emissions that are harmful to the planet. They then apply estimates of the social cost of carbon emissions (SCCh) to convert these carbon dioxide emissions into US dollar losses. With the social cost of carbon emissions of $100 per ton, the researchers found that for every bitcoin mined, the average climate loss is $3,088. Bitcoin’s total climate damage worldwide reached $12 billion between 2016 and 2021.
Researchers found that energy emissions from Bitcoin mining have increased 126 times - from 0.9 tons per coin in 2016 to 113 tons per coin in 2021. Calculations show that every bitcoin mined in 2021 will cause US$11,314 in climate damage. The damage reached its highest in May 2020, at 156% of the currency value, indicating that every $1 dollar of Bitcoin market value will cause global climate damage of $1.56.
reports estimated climate damage, carbon dioxide emissions and climate damage to Bitcoin mining account for a share of Bitcoin price.
The author compared Bitcoin climate damage to other industries and products such as power generation, crude oil processing, agricultural meat production, and precious metals mining. From 2016 to 2021, Bitcoin’s average climate damage accounted for 35% of its market value, which is lower than the market value of natural gas power generation (46%) and crude oil refining into gasoline (41%), but higher than beef production (33%) and gold mining (4%).
It should be noted that there is still a lot of debate about how much the social cost of carbon emissions should be. With $100 per ton as the baseline, the researchers actually took a moderate approach. When formulating pollution-related regulations, the U.S. government sets the social cost of carbon emissions at $51 per ton, which many experts believe is too low. Research published earlier this month in the journal Nature showed that the cost was $185 per ton.
In any case, the researchers noted that the climate damage to Bitcoin has grown over time, whether using social cost estimates of lower or higher carbon emissions.
According to a September report from the White House Office of Technology Policy, cryptocurrencies cause as much heat on the planet every year as all diesel used on the U.S. railroads. Another report from environmental groups Earth Justice and Sierra Club in September also came to a similar conclusion: cryptocurrency mining emitted about 27.4 million tons of carbon dioxide in a year, three times the pollution of the largest coal plant in the United States in 2021.
The author finally stated that Bitcoin failed to meet the three key sustainability indicators they evaluated and a radical change is needed to make Bitcoin mining sustainable, including potential regulatory measures.
Bitcoin’s closest “adversary” Ethereum recently completed a major software update that significantly reduced energy consumption in an action known as the “merger.” Andrew Goodkind, co-author of the above study and assistant professor of economics at the University of New Mexico, pointed out to the technology media The Verge that this is a potential solution to improve the sustainability of cryptocurrencies. If Bitcoin makes a similar update, “the climate damage it estimates in this study will likely become negligible,” the research report said.
Reference:
http://nature.com/articles/s41598-022-18686-8
https://www.theverge.com/2022/9/29/23378337/bitcoin-climate-change-damages-crypto-mining
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