Bitcoin is even less sustainable than beef farming and fossil fuels, research reveals

The study carried out over a period of five years looked at the carbon dioxide emissions associated with Bitcoin usage and the monetary value of the climate damage it caused.

The researchers also found that continued usage of Bitcoin in its current form was disastrous and would cause irreparable social and environmental damage in the future.

Climate damage caused by Bitcoin

The researchers found that during the period of their study, the carbon emissions from a single unit of Bitcoin went from less than a tonne (metric ton) to 113 tonnes (124 metric tons).

According to the researchers’ analyses, each Bitcoin mined in 2021 resulted in climate damages of around US$11,315. Taken together, this would result in climate damages of over $3.7 billion in that single year alone.

To put it into perspective with other activities that are not environment friendly, the researchers converted the damages to a percentage of Bitcoin’s market value and found it to be 35 percent. This would mean that for every US dollar worth of Bitcoin, 35 cents was the climate damage from it.

In comparison, the climate damage of natural gas was found to be 46 cents, while that of gasoline from crude oil was 41 cents. Bitcoin’s climate damages fared worse than beef farming as well which is pegged at 33 cents and far worse than mining for gold, which is estimated to be four cents. None of the activities mentioned are considered sustainable by experts.

Proof of Work to Blame?

To bring Bitcoin under the sustainable banner, the researchers suggest that cryptocurrency’s climate damages need to reduce over a period of time and as the technology matures.

Currently, the Proof of Work (PoW) system that Bitcoin uses relies on exponential use of computing power which in turn makes it energy intensive. Interesting Engineering, on multiple occasions, reported that Bitcoin’s energy consumption is larger than entire countries in Europe and currently relies on fossil fuel for more than 60 percent of its energy demand.

The cryptocurrency would do well to switch from the PoW to a proof-of-stake (PoS) system, where users contribute a small stake in their holdings to earn the right to add the next block in the chain of transactions. Such a system would drastically reduce Bitcoin’s energy usage, as it is expected to do for Ethereum, another blockchain platform that transitioned earlier this month.

The researchers recommend that the cryptocurrency industry make this voluntary switch soon, failing which it would have to be effected through regulation. The associated delays will continue to add to the climate damage of the cryptocurrency.

The research findings were published in the journal Scientific Reports.

Abstract

This paper provides economic estimates of the energy-related climate damages of mining Bitcoin (BTC), the dominant proof-of-work cryptocurrency. We provide three sustainability criteria for signaling when the climate damages may be unsustainable. BTC mining fails all three. We find that for 2016–2021: (i) per coin climate damages from BTC were increasing rather than decreasing with industry maturation; (ii) during certain time periods, BTC climate damages exceed the price of each coin created; (iii) on average, each $1 in BTC market value created was responsible for $0.35 in global climate damages, which as a share of market value is in the range between beef production and crude oil burned as gasoline, and an order-of-magnitude higher than wind and solar power. Taken together, these results represent a set of sustainability red flags. While proponents have offered BTC as representing “digital gold,” from a climate damages perspective it operates more like “digital crude.”