Technology: University of New Mexico researchers find Bitcoin mining is environmentally unsustainable

According to an analysis by academics at The University of New Mexico that was published in Scientific Reports, the climate change effects of mining the digital currency Bitcoin are more equivalent to those of extracting and refining crude oil than they are to mining gold.

According to the authors, Bitcoin should be compared to considerably more energy-intensive goods like meat, natural gas, and crude oil rather than being likened to "digital gold."

According to UNM Economics Associate Professor Benjamin A. Jones, "We find no indication that Bitcoin mining is getting more sustainable over time." Our findings, however, support the notion that bitcoin mining is really growing dirtier and more harmful to the environment over time. In other words, the environmental impact of Bitcoin is declining.

Bitcoin had a market worth of over 960 billion US dollars in December 2021 and held about 41% of the worldwide cryptocurrency market. Although recognized to be energy-intensive, it's unknown how much harm Bitcoin is doing to the environment.

Between January 2016 and December 2021, Jones and colleagues Robert Berrens and Andrew Goodkind give economic estimations of the climatic impacts caused by Bitcoin mining. According to their data, the mining of Bitcoin consumed 75.4 terawatt hours (TWh) of power in 2020, which is more than Portugal (48.4 TWh) or Austria (69.9 TWh) combined.

"Bitcoin mining, or production, requires enormous quantities of power, the majority of which is derived from fossil fuels like coal and natural gas. Huge amounts of air pollution and carbon emissions are being produced as a result, which is bad for both our health and the environment, according to Jones. Between 2016 and 2021, we discover multiple occasions when Bitcoin is more harmful to the environment than a single bitcoin is truly worth. To put it another way, there are some cases where climatic harm caused by Bitcoin mining exceeds the worth of the currency. From the standpoint of sustainability, this is very concerning.

Three sustainability criteria were used by the authors to evaluate the climate damages associated with Bitcoin: if they are expected to rise over time; whether they surpass the market price; and how they compare to those associated with other industries and commodities.

They discover that from 0.9 tonnes per coin in 2016 to 113 tonnes per coin in 2021, the CO2 equivalent emissions from energy generation for Bitcoin mining have surged 126-fold. According to calculations, each Bitcoin produced in 2021 caused 11,314 USD in climate damages, totaling more than 12 USD in losses globally between 2016 and 2021. In May 2020, damages reached at 156% of the coin price, indicating that for every $1 in Bitcoin market value created that month, $1.56 in climate damages were also generated.

According to Regents Professor of Economics Robert Berrens, "our focus is on those cryptocurrencies that rely on proof-of-work (POW) production procedures, which may be quite energy-intensive." "Creating governance structures for an emerging, decentralized economy, which includes energy-intensive POW cryptocurrency, is a policy problem within wider measures to reduce climate change. We think that concrete, empirical evidence of possibly irreversible financial impacts from climate change would support such initiatives.

Finally, the authors compared the climatic damages caused by Bitcoin to those caused by other businesses and goods, including the production of power from renewable and non-renewable sources, the processing of crude oil, the production of agricultural meat, and the mining of precious metals. Between 2016 and 2021, Bitcoin suffered average climate losses of 35% of its market value. This percentage for Bitcoin was higher than that of beef production (33%) and gold mining (4%), but it was somewhat lower than the climate damages as a percentage of the market value of electricity generated by natural gas (46%) and gasoline generated by crude oil (41).

The authors come to the conclusion that none of the three major sustainability criteria they looked at Bitcoin against were met. If proof-of-work mining is not switched off voluntarily, as it recently was for the cryptocurrency Ether, then possible legislation may be needed to make Bitcoin mining sustainable.