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Putting the brakes on cryptocurrencies: Well done Elon Musk

Putting the brakes on cryptocurrencies: Well done Elon Musk
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A few years ago, I was approached by a student with an idea to estimate the carbon footprint of something called Bitcoin as part of the research project for a graduate class I teach on big data analytics. Bitcoin? hmm, I had never heard of it and, I have to admit, I thought it was some type of video game, maybe a spinoff of Pokémon.

We gave the idea the benefit of the doubt and took some time to read about it. We learned that Bitcoin was invented by some guy called Satoshi Nakamoto, of whom there are hundreds, but no one wanted to take credit for the invention. We also learned that bitcoin was a "delusion" according to Warren Buffett. It was hard for me to take this idea seriously. 

There are bigger problems to help humanity that we can work on, I told my millennial students, and a couple colleagues that joined the class; but they had a different view and since the majority rules, there we went to study the carbon footprint of Bitcoin.

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To this day, it is still vague where most Bitcoin is being mined, so we could not just ask the mining rings to share their electrical bills with us. So, we developed a straightforward method that used the difficulty to mine all Bitcoin blocks in 2017 and the efficiency of existing hardware, to approximate the electricity used, which we then multiplied by the likely carbon produced to generate that much electricity. 

All the components of the mathematical equation were ready, so I clicked enter to run it. I waited anxiously until a number popped-up on my screen with so many zeros, I recall using my finger to count how many millions was that number. Are these grams of carbon, I thought? Nope, they were metric tons of carbon dioxide, 69 million of them.

We reran the calculations assuming that computers would become more efficient and that mining was happening in different countries, but not matter how we sliced the data, Bitcoin’s carbon footprint was still pretty huge. 

But wait, it got worse. My surprise came when we learned that such a massive footprint was to perform approximately 0.033 percent of all global cashless transactions in 2017. 

Others, using different methods, have recently estimated that a single Bitcoin transaction generates over 300 kilograms of carbon dioxide. As a reference, it takes a lifetime for a small sized tree to sequester that much carbon. 

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One really does not need a Ph.D. to predict the likely implications of this technology being more broadly implemented under current conditions. But we decided to put some numbers to it.

As a complement to the class project, we investigated the rate at which different technological innovations, from the toilet to credit cards, to the internet, etc., have become adopted by society. If we assume that Bitcoin is adopted at any rate at which other popular innovations have been incorporated by society, the carbon footprint would be enough to heat up the planet by more than 2 degrees Celsius  in a few decades. 

For comparison, the cumulative carbon emissions of humanity since the beginning of the industrial revolution accounts for just below 1 degrees Celsius, and the Paris Agreement attempts to curtail all future humanity’s carbon emissions to keep warming below 2 degrees Celsius. Clearly, the carbon footprint of Bitcoin, and other similar cryptocurrencies like Ethereum, are no joke. 

Our report was peer-reviewed and published in the scientific journal Nature Climate Change

The problem with carbon emissions is that they trap heat from the sun, causing warming, which in turn accelerates soil water evaporation that leads to drought, ripening conditions for heat waves and wildfires in some places, and massive precipitation and floods in others. In an earlier publication of this class, we found thousands of case examples in which these climatic hazards were already making people sick, hungry, thirsty, unsafe, homeless and poor; so, basically, climate change is already like a very real horror movie with thousands of endings to choose from.

For years, the scientific community has warned about the imminent dangers of climate change. But each year, we produce more greenhouse gases (GHG) than the year before. Some could justifiably argue that this is an unavoidable externality of us lacking sufficiently developed technologies to satisfy the vast amount of energy required to produce food, shelter, transport and trade for 7.9 billion of us. But how can we honestly justify a massive footprint on our planet for a technology (like cryptocurrencies) that doesn’t satisfy any primary human need? 

It is tempting to jump into the current cryptocurrency frenzy to make a few, or perhaps lots, of bucks, but given what we already know, it would be hard to ethically justify it. 

So last week’s announcement by Elon MuskElon Reeve MuskTesla begins delivery of high-performance Plaid model Democrats reintroduce bill to create 'millionaires surtax' 5 former Treasury secretaries back Biden's plan to increase tax enforcement on wealthy MORE that Tesla will not use bitcoin as payments because of its large carbon footprint is welcoming news. The decision appears to have put a halt on the rise of this technology, which hopefully allows us all to reflect on the environmental consequences of this investment. I, for one, do not want to move to Mars, if we ruin this planet.

Camilo Mora, Ph.D., is data analytics professor at the University of Hawaii.