Posted Sep 29, 2022, 7:15 PM
It’s a new way to calculate negative externalities and it won’t appeal to bitcoin miners. According to the journal “Scientific Reports” (Nature group), the energy consumed from 2016 to 2021 to produce BTC had a social and environmental impact comparable to that of beef production. Bitcoin, sometimes referred to as a digital safe haven, would also have an environmental cost nine times higher than gold mining, which is very real.
This study is based on the concept of the “social cost of carbon”, a method which quantifies the negative effects (health, economic and environmental) of the emission into the atmosphere of one ton of CO2 or its equivalent. With this method, which is spreading in the evaluation of the fight against climate change and its consequences, the cost of a ton of carbon dioxide is estimated between 50 and 185 dollars, according to different expert assumptions.
Another vision of profitability
The authors, using a cost of $100 per tonne, “estimate that each bitcoin produced in 2021 has generated $11,314 in climate damage, with total global damage exceeding $12 billion” since 2016. Over the past five years, this The social cost of bitcoin production has averaged 35% of the cryptocurrency’s market value.
In other words, 1 dollar of bitcoin produced had a social cost of 35 cents. A cost comparable to that of beef production (33%), lower than that of electricity generated from natural gas (46%) and much higher than gold mining (4%).
“Our results suggest that bitcoin production poses real sustainability issues,” lead author Benjamin Jones told AFP. “Bitcoin production is increasingly bad for the climate over time (on average),” he pointed out. This study notes that “energy emissions related to bitcoin mining have increased 126 times, from 0.9 tonnes of emissions per coin in 2016 to 113 tonnes per coin in 2021”.
Digital Crude Oil
Worse: “this production is sometimes overwhelmed, which means that its climatic damage exceeds the value of one bitcoin created”, he explained. Prior to the price explosion, in 2020, “bitcoin weather damage exceeded the price of coins sold” for nearly four months that year, peaking “at 156% of the price of coins in May 2020”. “From a climate damage perspective, bitcoin turns out to be digital crude oil rather than the digital gold touted by its proponents,” the authors write.
While mining farms are singled out for their energy consumption, according to a March 2022 report from the Bitcoin Mining Council, 58.4% of miners use renewable energy, including in France, like from Bigblock Datacenter. For the second major cryptocurrency, ether, the carbon footprint should improve significantly over time. This one has indeed made a radical change in mid-September, to make him save 99% of energy.
