Mining the cryptocurrency Bitcoin is becoming increasingly energy-intensive. According to a new study, digging for digital coins is about as damaging to the climate as the extraction and processing of crude oil in terms of market price. Three economics professors from the University of New Mexico in Albuquerque (US) have now examined the extent of the climate damage caused by Bitcoin mining and reported in the journal “Scientific Reports”.
The first Bitcoin came into circulation in 2009, making it the oldest cryptocurrency. It is also one of the most popular on the market: in December 2021, Bitcoin had a market capitalization of approximately $960 billion (currently equivalent to approximately $985 billion) and a global market share of approximately 41 percent. Bitcoins are also called digital gold: just like with gold mining, the virtual coins must also be mined – the so-called mining.
Every transaction must be verified
And that costs a lot of energy: the production is based on the so-called blockchain technology. This means that all bitcoin transactions are stored as cryptographically concatenated blocks of data. A network of miners (prospectors) verifies every transaction and ensures that the data block was generated correctly. Miners who are the first to verify a certain number of transactions and give the correct block are rewarded with new bitcoins.
This has created a competition in which miners around the world compete with ever-increasing computing power to add new elements to the so-called blockchain as quickly as possible. The number of miners is also increasing. In general, the energy requirement for mining the bitcoins is increasing.
Mining consumes more electricity than Austria
Benjamin Jones’s team has now calculated the energy requirement for digital prospecting. According to this data, global mining operations consumed 75.4 terawatt hours of electricity in 2020. This corresponds to more energy than Austria (69.9 TWh) or Portugal (48.4 TWh) in the same year.
The three researchers also found that for the period studied from 2016 to 2021, the climate damage per virtual currency steadily increased. “Our results suggest that bitcoin mining becomes dirtier and more climate-damaging over time,” Jones said. The University of Cambridge estimates that about 61 percent of the electricity used to mine cryptocurrencies such as Bitcoin comes from non-renewable energy sources such as coal and natural gas.
CO2 emissions per Bitcoin generated are increasing
According to calculations by Jones and colleagues, there is a sharp increase in CO2 emissions per bitcoin: Taking into account the global locations of miners and the electricity mix there, a virtual coin mined in 2021 emitted 126 times more CO2 than one from 2016. – an increase from 0.9 to 113 tons of CO2 per Bitcoin in just five years.
Climate damage estimated at $12 billion
The global Bitcoin climate damage in the 2016 to 2021 study period is estimated to total $12 billion. According to the authors, they exceeded the market price of mined coins on more than a third of the days in 2020. Climate damage peaked at 156 percent of the coin price in May 2020. Thus, every dollar of Bitcoin market value created this month was responsible for $ 1.56 in global climate damage. However, the value of Bitcoin had just fallen sharply at that time.
Harmful to the climate such as the oil and beef industry
Finally, the researchers compared the climate damage of the cryptocurrency with the damage of other products. According to the research, the climate damage caused by Bitcoins from 2016 to 2021 averaged 35 percent of the market value.
The mining of the cryptocurrency is thus comparable to other energy-intensive, highly climate-damaging processes such as beef production (33 percent), electricity generation from natural gas (46 percent) or gasoline production from crude oil (41 percent). Gold mining, on the other hand, produces only 4 percent of its market value from climate damage.
Researchers argue for green energy and regulation
In order for such Bitcoin damage to amount to four percent of the market value in the future, the share of renewable energy for mining Bitcoins would have to be close to 90 percent, according to the scientists. To combat climate change, governments should regulate energy-intensive processes like bitcoin mining through political mechanisms, says study co-author Robert Berrens.
Meanwhile, the second most important cryptocurrency after Bitcoin, ether, has completed a kind of energy transition in mid-September: According to the Ethereum Foundation, power needs were reduced by 99.95 percent with the adjustment of the consensus or security procedure for transactions that had been planned for years.
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
