Carbon emissions from mining a single bitcoin increased from 0.9 tons to 113 tons between 2016 and 2021, a 126-fold increase within five years. Today, the bitcoin industry is more damaging to the environment than global beef production.
This makes the bitcoin industry more harmful to the environment than global beef production.
When mining bitcoins, computers compete to solve a mathematical puzzle. The first miner to solve the puzzle gets an amount of bitcoin as a reward. This same process also ensures that the cryptocurrency’s transactions are unquestionably stored.
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“Because you can earn a lot of money with it, many people participate in this guessing game,” says Benjamin Jones, associate professor of economics at the University of New Mexico in the United States. ‘And that costs a lot of electricity, much of which is generated with fossil fuels.’
Price of emissions
To estimate the climate impact of mining, counted Jones and his colleagues first the number of coins mined daily between 2016 and 2021. Then they looked at the location of the miners, the amount of energy and the type of energy they probably used, to estimate the emissions per bitcoin.
Their work shows that carbon emissions skyrocketed from 0.9 tons per bitcoin in 2016 to 113 tons each in 2021, a 126-fold increase. They estimate that each coin mined in 2021 exceeded 11 thousand. euros in climate damage.
In part, these rising environmental costs are due to more people’s interest in mining bitcoin as the price rises. The price of a single bitcoin has risen from 430 euros in 2016 to more than 46 thousand euros at the end of 2021.
Crypto, oil and meat
Jones and his team then looked at the value of a bitcoin versus its environmental damage, which they then compared to other industries. The researchers found that every euro of bitcoin mined between 2016 and 2021 led to 35 cents in climate damage. During the same period, every dollar of gasoline produced from crude oil resulted in 41 cents in damage. In beef production this was about 33 cents.
The results provide context to “the climate catastrophe that bitcoin and many other cryptocurrencies are largely unnoticed,” says Camilo Mora, professor in the faculty of geology and environment at the University of Hawaii. “Governments really need to start regulating and setting environmental standards for the use of cryptocurrencies.”
By changing the way bitcoin is mined, you can make this process a lot less energy-consuming. The popular cryptocurrency Ethereum made a climate-friendly change to its underlying technology earlier this month. Jones hopes that bitcoin will follow, even if there are considerable hurdles to overcome, such a change is not very likely. “You can’t change energy consumption until you change the rules of the game,” Jones says.