Bitcoin as expensive for the environment as beef production

In proportion to the market price, the environmental costs of mining the cryptocurrency Bitcoin are more comparable to the damages of beef production than gold mining.

The authors of an analysis published in Scientific Reports suggest that rather than be viewed as “digital gold,” Bitcoin should be compared to much more energy-intensive products, such as beef, natural gas, and crude oil.

As of December 2021, Bitcoin had a market value of approximately $960 billion, with a global market share of approximately 41 % among cryptocurrencies. Although known to be energy-intensive, the extent of bitcoin’s climate damage—that is, estimates of the financial damage from carbon emissions and the impact of climate change on economies—is unclear.

Benjamin Jones and colleagues have made economic estimates of the climate damage from bitcoin mining between January 2016 and December 2021 and report that in 2020 bitcoin mining used 75.4 terawatt hours per year (TWhyear-1), higher energy use than Austria (69.9 TWhyear-1) or Portugal (48.4 TWhyear-1).

The authors assessed bitcoin’s climate damage against three sustainability criteria: whether the estimated climate damage increases over time; if the market price of bitcoin exceeds the economic cost of climate damage; and how climate damages per mined currency compare to climate damages from other sectors and commodities.

They found that energy emissions from bitcoin mining have increased 126-fold, from 0.9 tons of emissions per coin in 2016 to 113 tons per coin in 2021. Calculations suggest that each bitcoin mined in 2021 caused $11,314 in damage. climate, with a total of global damages that exceed 12,000 million dollars (about 12.5 million euros), 25 % of market prices. Damage peaked at 156 % of the coin’s price in May 2020, suggesting that every dollar of bitcoin market value led to $1.56 in global weather damage.

Lastly, the authors compared bitcoin’s climate damage to other industries and products such as electricity generation, crude oil processing, agricultural meat production, and precious metal mining. Bitcoin weather damages stood at an average of 35 % of its market value between 2016 and 2021. This was less than weather damages compared to the market value of electricity produced by natural gas (46 %) and the gasoline produced from crude oil (41 %), but more than those from beef production (33 %) and gold mining (4 %).

The authors conclude that bitcoin does not meet any of the three key sustainability criteria they evaluated it against, and that significant changes – including possible regulation – are required for bitcoin mining to be sustainable.

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Source: dpa