Bitcoin mining in 2020 will use more energy than Austria or Portugal, and Bitcoin emissions as a percentage of market value will rival the beef industry, a new study has found.
- Bitcoin miners are in an “arms race” using more powerful and energy-hungry computers to lower cryptocurrency yields.
- Mining emissions jumped 126-fold in 5 years
- Rival cryptocurrencies claim to have cut their emissions by 99% by changing their trading model, and activists are calling for Bitcoin to follow suit.
research, Published in Scientific Reports This week we calculated the energy intensity of Bitcoin mining and the annual emissions from mining from 2016 to 2021.
Using these figures, the researchers estimated the potential costs due to climate and health impacts incurred by these emissions.
They found that Bitcoin mining averages over 75 terawatt hours per year. This exceeds the energy budgets of some countries.
Between 2016 and 2021, the emissions to produce each coin increased from less than 1 tonne per coin to 113 tonnes, according to researchers.
When we compared the potential cost of climate damage from those emissions as a percentage of other industries’ emissions and market value, we found that Bitcoin mining is less costly than fossil fuel production and less expensive than beef production. was also found to be slightly more expensive.
As a share of market value, the estimated cost of mining Bitcoin’s health and climate impacts was found to be several times greater than mining gold.
During periods when Bitcoin’s market value fell, the estimated climate costs of mining emissions exceeded the value of the coin itself.
Bitcoin model is intentionally energy intensive
Bitcoin uses the “Proof of Work” or PoW protocol. According to University of Canberra economist John Hawkins, this provides the currency with built-in security, but intentionally makes it difficult to mine.
Fundamentally how Proof of Work works is that transactions are verified by a computer that solves a mathematical problem that can be easily checked once solved.
But as mining becomes more competitive, the system adjusts to make the equation more difficult.
According to Dr. Hawkins, it sparked an “arms race” that required more processing power than ever before to mine coins.
“When Bitcoin first started, I was able to solve my problems using my home computer in my bedroom.
“The only person who can solve the problem first Today, there are people hanging around vast warehouses of these computers. “
In that regard, the code is wasteful by design and will continue to use more energy as mining becomes more competitive.
According to University of Queensland economist John Kiggin, some cryptocurrency miners claim to use renewable energy for mining, but increased demand across the electricity grid has pushed fossil fuels out of the market. Demand is still growing.
“Bitcoin fans’ excuse of using renewable energy is sometimes unjustified,” said Professor Cuigin.
A cleaner alternative exists
There are alternatives to the Bitcoin model.
Ethereum, one of the most popular cryptocurrencies behind Bitcoin, has switched from Proof of Work to “Proof of Stake” or PoS.
Under that system, crypto transactions are validated by other Ethereum holders holding large amounts of blockchain tokens or coins as collateral.
Ethereum estimates that the switch made this year will reduce emissions by as much as 99%.
While the model switch appears to be on track for Ethereum, Hawkins said it would be a very difficult process and Bitcoin would likely be reluctant to follow suit within the cryptocurrency community. .
“Some say it’s like trying to change an airplane engine mid-flight,” he said.
“There are hard-line Bitcoin fanatics who say, ‘You can’t change Bitcoin.’”
He also said that because cryptocurrencies are decentralized platforms, it would be very difficult for governments to force changes in practices.
“There is no Bitcoin company that can be taken to court, or a Bitcoin CEO who will be held accountable.”
However, the government can regulate how institutions such as banks do or do not handle currency, he said.
Greenpeace USA has launched a campaign called “Change the Code, Not the Climate” to pressure Bitcoin to change to a model similar to Ethereum.
In a statement last month, Greenpeace USA Special Projects Manager Rolf Skar said he has an obligation to use Bitcoin to force change in companies.
“We are facing a climate crisis and everyone has a responsibility to act,” Scar said.
“With Ethereum moving to an energy efficient protocol, it is time for Bitcoin to change.
“Fidelity Investments, BlackRock, PayPal, Block and others who profit from promoting Bitcoin have a responsibility to participate in building a better, climate-friendly Bitcoin.”