Story at a glance
- Online crypto currencies can use an enormous amount of energy.
- To better estimate the environmental impacts of Bitcoin mining, researchers assessed its ‘social cost of carbon’ value.
- Damages from Bitcoin’s carbon dioxide emissions are similar to those inflicted by the beef industry and burning of crude oil.
New research puts the climate damage of Bitcoin on par with pollution from the beef production industry and crude oil burned as gasoline, suggesting the crypto currency could worsen climate change if the status quo continues.
Using a metric known as the social cost of carbon, researchers found that between 2016 and 2021, each $1 in Bitcoin market value created was responsible for $0.35 in global climate damages, falling between that measured for beef production ($0.33) and crude oil burned as gasoline ($0.41).
They also found that as the industry matured, per coin climate damages increased instead of decreasing, and, at certain time points, Bitcoin climate damages exceeded the price of each coin created.
The $0.35 in damages created by Bitcoin is also higher than both wind and solar power, but lower than electricity generated from coal.
“Taken together, these results represent a set of sustainability red flags,” authors wrote. “While proponents have offered Bitcoin as representing ‘digital gold,’ from a climate damages perspective it operates more like ‘digital crude.’”
In 2020 alone, Bitcoin mining used more electricity than the entire country of Austria or Portugal.
Compared with 2016 rates, in 2021 a Bitcoin mined emitted 126 times the carbon dioxide equivalent on average into the atmosphere, increasing from 0.9 to 113 tonnes per coin.
In addition, “each Bitcoin created in 2021 resulted in $11,314 in climate damages, on average, with total global damages of all coins mined in 2021 exceeding $3.7 billion,” authors wrote. Total global Bitcoin climate damages were estimated to reach $12 billion between 2016 and 2021.
The social cost of carbon accounts for damaging factors that result from the emission of 1 extra ton of carbon dioxide into the atmosphere. These can include losses in agricultural and labor productivity and destruction caused by rising sea levels.
Previous research has estimated the majority of electricity used to mine cryptocurrencies like Bitcoin comes from fossil fuels, while on average, 39 percent comes from renewable energy sources.
In the analysis, researchers used a social cost of carbon measured at $100 per ton to determine their estimates.
However, varying totals for this cost have been proposed, and the current U.S. government’s value stands at $51 per ton in 2020 dollars.
When researchers tested multiple social costs of carbon values in their models, climate damages of Bitcoin mining still increased substantially from 2016 to 2021, and had a continuing upward trajectory.
Additional models did show increased use of renewable sources to generate electricity lead to lower associated climate damages for each coin. However, even in a high renewable scenario “the climate damages still average 23% of the coin’s price (2016–2021), despite miners only using 37% of their electricity from fossil fuels,” authors cautioned.
The study only measured environmental damages and did not assess any health-related costs associated with Bitcoin, meaning the sustainability evaluations could be worse than reported.