Bitcoin ‘as bad for environment as beef production’

Bitcoin is doing as much damage to the environment as beef production, researchers have found in a new report about the impact of the popular cryptocurrency on the climate.

Rather than being seen as similar to ‘digital gold’, Bitcoin should instead be compared to much more energy intensive products such as beef, natural gas, and crude oil, the report said.

In December 2021, Bitcoin had an approximate market value of $960 billion, with a roughly 41 percent global market share among cryptocurrencies.

The climate damage the researchers referred to are estimates of financial damage from carbon emissions and the impact of climate change on economies.

While it has always been known that Bitcoin is energy intensive, it has so far been unclear the extent of its impact on the environment.

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In analysis published in Scientific Reports, Benjamin Jones and colleagues from the University of New Mexico presented economic estimates of climate damages from Bitcoin mining between January 2016 and December 2021.

They found 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 re 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 found 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.

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Calculations suggested 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 at 46 per cent, and gasoline produced from crude oil at 41 per cent.

However, it was more than those of beef production at 33 per cent and gold mining at 4 per cent.

The authors concluded 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.