Bitcoin mining in 2020 used more energy than Austria or Portugal, and its emissions as a proportion of market value were comparable to those of the cattle industry, according to a new study.
- Bitcoin miners are in an ‘arms race’, using more powerful and power-hungry computers to diminish cryptocurrency returns
- Emissions from mining have increased 126 times in five years
- Rival cryptocurrency claims to have cut emissions by 99% by changing its transaction model, and activists call on Bitcoin to follow suit
The research, published in Scientific Reports this week, calculated Bitcoin mining energy intensity and annual mining emissions between 2016 and 2021.
Using these figures, the researchers estimated the potential cost of climate and health impacts that these emissions would cause.
They found that Bitcoin mining uses an average of over 75 terawatt hours per year, more than some countries’ energy budgets.
Between 2016 and 2021, the emissions to produce each coin increased from less than a tonne to 113 tonnes per coin, according to the researchers.
When they compared the potential climate damage cost of these emissions to emissions from other industries, as a proportion of their market value, they found that mining Bitcoin was less expensive than producing fossil fuels, but slightly more. expensive than beef production.
The estimated health and climate impact costs of Bitcoin mining, as a share of market value, were many times greater than those of gold mining, they found.
During times when Bitcoin’s market value has crashed, the estimated climate costs of mining emissions have exceeded the value of the coin itself.
Voluntarily energy-intensive Bitcoin model
Bitcoin uses the “proof of work” or PoW protocol. This gives the currency a fail-safe, but also makes it intentionally laborious to mine, according to economist John Hawkins of the University of Canberra.
Essentially, the way proof of work works is that transactions are verified by computers solving mathematical problems that, when solved, are easy to verify.
But as mining competition increases, the system adjusts to make the equations harder.
This has created an “arms race”, Dr Hawkins said, with more and more processing power needed to mine the parts.
“When Bitcoin started, you could solve the problem by using a personal computer in your bedroom.
“The only people with a chance to solve the problem first today there are people who have vast warehouses of these computers going around in circles.”
In this regard, the code is wasteful by design and will continue to use more power as mining competition grows.
Although some cryptocurrency miners claim to use renewable energy for mining, increasing demand on the global grid has still increased demand for fossil fuels, said economist John Quiggin of the ‘University of Queensland.
“Bitcoin fans’ excuses that they use renewable energy sometimes don’t hold water,” Professor Quiggin said.
Cleaner alternatives exist
There are alternatives to the Bitcoin model.
Ethereum, one of the most popular cryptocurrencies behind Bitcoin, has moved from proof of work to “proof of stake”, or PoS.
Under this system, crypto transactions are validated by other Ethereum owners who stake large amounts of their blockchain tokens or coins, as collateral.
Ethereum estimates that the change, which was made this year, will reduce emissions by up to 99%.
Although the model change seems to be going well for Ethereum, Dr. Hawkins said it was a very difficult process and there would likely be resistance within the crypto community to Bitcoin following suit. not.
“Some people said it was like trying to change the engine of the plane while it was flying,” he said.
“There are these die-hard bitcoin fanatics who say, ‘You can’t change bitcoin’.”
And because cryptocurrency is a decentralized platform, it’s very difficult for governments to force them to change their practices, he said.
“It’s not like there’s a bitcoin company you can sue, or a bitcoin CEO you can hold accountable.”
However, he said governments could regulate how institutions such as banks deal with currency or not.
Greenpeace USA launched a campaign called “Change the code, not the climate” to try to pressure Bitcoin to switch to a model similar to Ethereum.
In a statement last month, Greenpeace USA Special Project Manager Rolf Skar said it was up to companies using Bitcoin to force change.
“We are in a climate crisis and everyone has a responsibility to act,” Mr Skar said.
“With Ethereum shifting to an energy-efficient protocol, it’s time for Bitcoin to change.
“Companies that promote and profit from Bitcoin, such as Fidelity Investments, BlackRock, Paypal, and Block, have a responsibility to help build a better, climate-friendly Bitcoin.”