Bitcoin is not sustainable. The environmental impact of the call mining of this digital cryptocurrency is already equivalent to that caused by the production of beef on a global scale, according to an analysis published this Thursday in the magazine Nature.
The end of the crypto mining fever reduces the prices of graphics cards and computers
Experts suggest that instead of viewing bitcoin as some kind of virtual goldshould be compared with much more earthly products (metals and raw materials) whose extraction or production consumes enormous amounts of energy and pollutes the air, water and soil.
Around 61% of cryptocurrency mining consumes electricity produced with coal and natural gas, highly polluting fuels, the authors recall in a press release.
Virtual money, real pollution
Bitcoin is a hidden digital currency (hence the prefix ‘crypto’, from the Greek for ‘hidden’). Unlike a real currency, cryptocurrencies are not minted, but mined from the virtual world, like a precious metal. And, as with precious metals, the amount of bitcoin is limited: there are 21 million bitcoins, of which more than 19 million have already been mined.
In the search for gold, the miners carry out countless tests on the ground to find a vein of the precious metal. In the search for bitcoins, the terrain is a gigantic puzzle of mathematical blocks and the tastings are millions of computer calculations. Coins are mined undermine– solving equations.
Computing power is essential to solve those mathematical puzzles behind which the coin is hidden. It is a huge puzzle invented in 2008 by Satoshi Nakamoto, pseudonym of the programmer or group of programmers who invented this hidden coin. Whoever decrypts a block and adds it to the chain (blockchain), mine bitcoin. The certificate that attests to that extraction –and to the ownership of the bitcoin– is not issued by any authority or central bank, but by the rest of the miners.
Cryptocurrency mining requires a network of millions of computers turned on 24 hours a day, 365 days a year. The more computers a miner has, the more chances to mine bitcoins: pure computational brute force. In the field of traditional mining, it would be the difference between a pickaxe and a tunnel boring machine. For this reason, in recent years there has been a proliferation of so-called mining farmsinstallations with hundreds of computers working in a network… and consuming energy.
More electricity than Austria or Portugal
It is well known that the processes to generate this cryptocurrency involve intensive use of energy, but the extent of the climate damage attributable to bitcoin was not clear. It was therefore a matter of calculating two things: the financial damage caused by the CO2 emissions necessary to extract the currency and the impact on the economy of the climate crisis caused by those emissions.
Researcher Benjamin Jones and colleagues have presented economic estimates of the damage from bitcoin mining between January 2016 and December 2021. In their analysis they report that in 2020 this mining activity used 75.4 terawatt-hours of electricity per year. (TWh/year), a consumption higher than that of Austria (69.9 TWh/year) or Portugal (48.4 TWh/year).
The authors assessed bitcoin’s climate damage based on three sustainability criteria: whether the damage increases over time; if the market price of bitcoin exceeds the economic cost of the damage caused; and how the damage caused by each mined currency compares to the damage caused by other sectors and commodities.
A bitcoin is worth about 21,000 euros this week. As of December 2021, the total volume of bitcoin had a market value of approximately €999 billion, with a global share of 41% among cryptocurrencies. The current market value of the entire bitcoin pool has fallen to around 378 billion euros – the famous puncture of the cryptocurrency bubble – but this currency maintains its global share of around 41% in that market.
Researchers have found that polluting 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 every bitcoin mined in 2021 generated a cost of 11,764 euros in climate damage, with a total global damage of around 12,500 million euros.
Damage peaked at 156% of the coin’s price in May 2020, suggesting that each euro of bitcoin’s market value caused 1.56 euros worth of global weather damage.
It is a new case in which a few pocket an economic benefit (profits are privatized) and the rest of the world, in one way or another, pays –we pay– for the damage caused (losses are socialized).
Lastly, the authors compared the climate impact of bitcoin with that of other industries and products. Specifically, with the generation of electricity, the refining of crude oil, livestock production and the mining of precious metals.
The climate impact of bitcoin stood at an average of 35% of its market value between 2016 and 2021. A smaller proportion than the impact of electricity generated with natural gas (46%) and gasoline made from oil crude (41%). However, the impact is greater than that of beef production (33%) and gold mining (4%).
The authors conclude that bitcoin does not meet any of the three key sustainability criteria they assessed it against, and that significant changes – including possible regulation – are needed for bitcoin mining to be sustainable.