It’s abundantly clear that the rise of Bitcoin and other cryptocurrencies is a pernicious blight on the environment and efforts to fight climate change—no matter how much Bitcoin advocates say otherwise.
And it turns out the costs of Bitcoin’s environmental destruction is on par with that of the beef industry, according to a new study published Thursday in Scientific Reports. The authors—economists from the University of New Mexico—say that rather than representing a new kind of “digital gold,” Bitcoin is emerging more as a “digital crude” when it comes to a climate perspective.
At the end of last year, the market value for Bitcoin, the most popular cryptocurrency, was projected to be about $960 billion. Advocates have consistently promoted Bitcoin as a potential tool that can be used to encourage the exchange and growth of sustainable products and services.
But its development is grounded in cryptocurrency mining, a process in which computers compete with one another to solve complex mathematical problems to provide “proof” that a transaction has taken place. You can read more about how this works here, but the gist is that running these computers—which are often housed in large facilities—consume an enormous amount of electricity. If that power source isn’t green, then the mining operations are basically leading to a huge swell in carbon emissions as a result.
It doesn’t help that China recently banned Bitcoin mining from taking place on its land. Most of those operations were running on electricity generated by hydroelectric plants. As those operations have moved to the West, they’ve situated themselves on grids tied to fossil-fuel burning plants.
The new study reveals that between Jan. 2016 and Dec. 2021, Bitcoin mining used 75.4 terawatt hours per year. That’s more energy than was used annually in the entire country of Austria or Portugal.
The researchers went on to assess what the climate damages caused by Bitcoin have been over this time. The analysis suggests that carbon emissions increased 126 fold. By Dec. 2021, each coin was responsible for about 113 tonnes in carbon emissions—and about $11,314 in damages per coin.
In fact, the climate damages often exceeded the actual value of the Bitcoin market—peaking in May 2020, when each $1 worth of Bitcoin led to $1.56 in global climate damages.
Bitcoin wouldn’t be the first industry with an outsized impact on the climate. But it’s remarkable in how it has already surpassed many others in such a short time. Bitcoin’s climate damages are estimated by the authors to be about 35 percent of its market value. That’s higher than global beef production (33 percent), and not much lower than gasoline production from crude oil (41 percent).