Mining Bitcoin can be damaging to the environment and contribute to climate catastrophe, according to a new study.
The environmental and social damage Bitcoin inflicts on the world is comparable to notoriously polluting industries such as beef production and crude oil burned as gasoline, according to new a new study published today in the journal Scientific Reports. The research found that every $1 in Bitcoin market value generated an average of 35 cents in global climate damages between 2016 and 2021.
For comparison, gasoline generated 41 cents, and beef production was responsible for 33 cents in damages. When it comes to both their economic value and environmental impact, Bitcoin is sometimes compared (albeit contentiously) to gold. This new study finds that the climate damages from Bitcoin were actually 8.75 times greater than gold. “When compared with mining gold, Bitcoin’s climate damage share is nearly an order of magnitude higher,” Andrew Goodkind, a co-author of the study and an assistant professor of economics at the University of New Mexico, said in an email to The Verge.
So what exactly are climate damages? To estimate the dollar cost of future harm to the planet from climate change, the researchers used a key metric used in policymaking. In policy-speak, the researchers looked at “the social cost of carbon,” which takes into consideration things like losses in agricultural and labor productivity and destruction caused by rising sea levels. Researchers use climate models and other data to calculate how much damage (in dollars) might be done for every extra ton of carbon dioxide that goes into the atmosphere.
The Bitcoin network infamously eats up as much electricity annually as a small nation. The vast majority of the energy is used to verify transactions and “mine” new coins. The study authors estimated the network’s overall electricity consumption and the planet-heating carbon dioxide emissions that it generates as a result. Then they applied estimates of the social cost of carbon to translate those CO2 emissions into dollar damages. With the social cost of carbon at $100 a ton, the researchers found that climate damages averaged $3,088 for each coin that was mined. Between 2016 and 2021, the researchers estimate that Bitcoin’s total climate damages globally reached $12 billion.
The caveat is that there’s still a lot of debate swirling over how much the per ton social cost of carbon should actually be. Using $100 a ton as their baseline, the researchers took a middle-of-the-road sort of approach. The US government, for instance, places the social cost of carbon at $51 per ton when crafting regulations for pollution – a figure many experts consider to be too low. Research published in the journal Nature earlier month put the cost at $185 per ton.
Regardless, the researchers point out that Bitcoin’s climate damages grew over time, whether using low or high-end estimates for the social cost of carbon. And their findings come on the heels of other efforts to quantify how much harm mining Bitcoin does to the planet. Energy-hungry cryptocurrencies are responsible for about as much planet-heating pollution annually as all the diesel fuel used on the nation’s railroads, according to a September report from the White House Office of Science and Technology Policy. Another September report from environmental groups Earthjustice and Sierra Club came to a similar conclusion – that crypto mining pumped out about 27.4 million tons of CO2 in a year, which was three times as much as the pollution from the US’s largest coal plant in 2021.
With pressure building to clean up the crypto industry, Bitcoin is now an outlier when it comes to its environmental impact. Its closest rival, Ethereum, recently completed a major software update to drastically reduce its energy consumption in a highly anticipated event called The Merge. Goodkind points to that as an example of potential solutions to make cryptocurrencies more sustainable. If Bitcoin were to make a similar update, “its climate damages estimated in this work, would likely become negligible,” the study says.
Original source: https://www.theverge.com