The environmental and social damage Bitcoin is inflicting on the world is comparable to notoriously polluting industries like beef production and crude oil burned like gasoline, according to a new study published today in the magazine Scientific Reports. The research found that every $1 worth of Bitcoin market value between 2016 and 2021 caused an average of 35 cents in global climate damage.
By comparison, gasoline brought in 41 cents and beef production was responsible for 33 cents of damage. When it comes to both their economic value and environmental impact, Bitcoin is sometimes compared (although controversial) to gold. This new study finds that Bitcoin’s climate damage was 8.75 times greater than gold’s.
“Compared to mining gold, Bitcoin’s share of climate damage is almost an order of magnitude higher,” Andrew Goodkind, a study co-author and an assistant professor of economics at the University of New Mexico, said in a statement. email to The edge.
So what exactly is climate damage? To estimate the dollar cost of future damage to the planet from climate change, the researchers used an important metric used in policy making. In policy language, the researchers looked at “the social costs of carbon”, which takes into account things like agricultural and labor productivity losses and destruction caused by rising sea levels. Researchers use climate models and other data to calculate how much damage (in dollars) could be done for each additional ton of carbon dioxide released into the atmosphere.
The Bitcoin network consumes so much electricity every year like a small nation. The vast majority of the energy is used to verify transactions and “mine” new coins. The study’s authors estimate the grid’s total electricity consumption and the carbon dioxide emissions that are warming the planet generates as a result. They then used estimates of the social cost of carbon to convert those CO2 emissions into dollar damage. With the social cost of carbon of $100 per ton, the researchers found that climate damage averaged $3,088 for every coin mined. Between 2016 and 2021, the researchers estimated that Bitcoin’s total climate damage was $12 billion worldwide.
The caveat is that there is still much debate about how much the social cost of carbon per tonne should actually be. Using $100 per ton as a base, the researchers took a middle ground approach. For example, the US government calculates the social costs of carbon $51 per ton when drafting regulations for pollution – a figure that many experts consider too low. Research published in the journal Nature earlier month put the cost up $185 per ton.
Regardless, the researchers point out that Bitcoin’s climate damage has increased over time, whether from low or high-end estimates of the social cost of carbon. And their findings come on the heels of other attempts to quantify how much damage Bitcoin mining is doing to the planet. According to a September report from the White House Office of Science and Technology Policy, energy-hungry cryptocurrencies are responsible for about as much global warming pollution each year as all the diesel used on state rail. Another September report from environmental groups Earthjustice and Sierra Club came to a similar conclusion – that crypto mining pumped out about 27.4 million tons of CO2 in a year, which was three times the pollution of the US’s largest coal-fired power plant in 2021.
With pressure mounting to clean up the crypto industry, Bitcoin is now an outlier when it comes to environmental impact. Its closest rival, Ethereum, recently completed a major software update to dramatically reduce power consumption in a highly anticipated event called The Merge. Goodkind cites that as an example of possible solutions to make cryptocurrencies more sustainable. If Bitcoin were to make a similar update, “the climate damage estimated in this work would likely become negligible,” the study says.