Bitcoin costs beat entire nations
Experts have made new estimates on the environmental cost of Bitcoin mining.
A new analysis from the US finds Bitcoin mining's environmental toll is more comparable to producing beef than mining for gold.
In December 2021, Bitcoin had an approximately 960 billion US dollars market value with a roughly 41 per cent global market share among cryptocurrencies.
Although known to be energy intensive, the extent of Bitcoin’s climate damages - estimates of financial damage from carbon emissions and the impact of climate change on economies - is unclear.
The new economic estimate cover climate damages from Bitcoin mining between January 2016 and December 2021.
A team from the University of New Mexico reports that in 2020, Bitcoin mining used 75.4 terawatt hours per year (TWhyear-1) – higher energy usage than Austria (69.9 TWhyear-1) or Portugal (48.4 TWhyear-1).
The authors assessed Bitcoin climate damages according to three sustainability criteria: whether the estimated climate damages are increasing over time; whether the market price of Bitcoin exceeds the economic cost of climate damages; and how the climate damages per coin mined compare to climate damages of other sectors and commodities.
They find that the energy emissions for Bitcoin mining have increased 126 fold from 0.9 tonnes of emissions per coin in 2016, to 113 tonnes per coin in 2021.
Calculations suggest each Bitcoin mined in 2021 generated 11,314 USD in climate damages, with total global damages exceeding 12 billion USD – 25 per cent of market prices.
Damages peaked at 156 per cent of coin price in May 2020, suggesting that each 1 USD of Bitcoin market value led to 1.56 USD in global climate damages.
Finally, the authors compared Bitcoin climate damages to damages from other industries and products such as electricity generation, crude oil processing, agricultural meat production, and precious metal mining.
Climate damages for Bitcoin averaged at 35 per cent of its market value between 2016 and 2021. This was less than the climate damages compared to market value of electricity produced by natural gas (46 per cent) and gasoline produced from crude oil (41 per cent), but more than those of beef production (33 per cent) and gold mining (4 per cent).
The authors conclude that Bitcoin does not meet any of the three key sustainability criteria they assessed it against, and that significant changes - including potential regulation - are required to make Bitcoin mining sustainable.
The study is accessible here.