Bitcoin mining uses more energy than beef production, study finds

Bitcoin is the world’s most popular cryptocurrency, but new research suggests its environmental impact may be underestimated.

In a new study, academics in the US have presented ‘energy-related climate damages’ from human activity in the past five years, including Bitcoin mining.

Bitcoin mining is the energy-intensive process of creating new Bitcoins by solving computational problems that verify transactions in the currency. 

The researchers say Bitcoin mining uses more energy per year than the whole of Austria and is more environmentally costly than beef production or the mining of precious metals such as gold and copper. 

Rather than being considered akin to ‘digital gold’, Bitcoin should be compared to energy-intensive products such as beef, natural gas and crude oil, the experts say.

The new study has been led by researchers at the University of New Mexico and published today in Scientific Reports. 

‘We find no evidence that Bitcoin mining is becoming more sustainable over time,’ said study author Professor Benjamin A. Jones at the University of New Mexico.

‘Rather, our results suggest the opposite – Bitcoin mining is becoming dirtier and more damaging to the climate over time. 

‘In short, Bitcoin’s environmental footprint is moving in the wrong direction.’ 

Blockchains – the technology that underpins cryptocurrencies including Bitcoin – use a model called ‘proof-of-work’ for validating new transactions.

Proof-of-work means the blockchains are secured and verified by virtual miners around the world, who are racing to be the first to solve a maths puzzle in return for money as a reward.

But proof-of-work involves substantial and expensive processing power, which only increases as more miners join the network. It’s also a painfully slow process – verifying each transaction takes about 10 minutes. 

Bitcoin has the biggest energy consumption out of all the cryptocurrencies because it’s the most widely used, according to Ian Silvera, crypto lead at consultancy SEC Newgate, who was not involved with the study. 

‘Bitcoin runs on a so-called proof-of-work consensus where a node must show the network its proof of work to be rewarded with a Bitcoin, a bit like handing your homework in at school and getting a mark from the teacher,’ Silvera told MailOnline. 

‘Due to the very nature of Bitcoin’s anti-inflationary programming, those computational tasks get harder and harder. 

‘Bitcoin miners react by buying more specialised computers (rigs) and end up using more and more energy.’ 

The environmental impact of Bitcoin has already been documented, and although it’s known to be energy intensive, the extent of its damage to the climate is unclear, the University of New Mexico researchers argue. 

In the study, they present economic estimates of climate damages from Bitcoin mining between January 2016 and December 2021. 

They report that in 2020 Bitcoin mining used 75.4 terawatt hours of electricity (TWh) – higher electricity usage than Austria (69.9 TWh) or Portugal (48.4 TWh) in that year. 

‘Globally, the mining, or production, of Bitcoin is using tremendous amounts of electricity, mostly from fossil fuels, such as coal and natural gas,’ said Professor Jones. 

‘This is causing huge amounts of air pollution and carbon emissions, which is negatively impacting our global climate and our health. 

‘We find several instances between 2016-2021 where Bitcoin is more damaging to the climate than a single Bitcoin is actually worth. 

‘Put differently, Bitcoin mining, in some instances, creates climate damages in excess of a coin’s value. This is extremely troubling from a sustainability perspective.’

The authors assessed Bitcoin’s climate damages according to three sustainability criteria – whether the estimated climate damages are increasing over time, whether the climate damages of Bitcoin exceeds the market price, and how the climate damages as a share of market price compare to other sectors and commodities.

But they found that Bitcoin does not meet any of the three key sustainability criteria they assessed it against. 

According to the study, the CO2 equivalent emissions from electricity generation for Bitcoin mining have increased 126-fold from 0.9 tonnes per coin in 2016, to 113 tonnes per coin in 2021. 

Calculations suggest each Bitcoin mined in 2021 generated $11,314 in climate damages, with total global damages exceeding $12 billion between 2016 and 2021. 

Damages peaked at 156 per cent of the coin price in May 2020, suggesting that each $1 of Bitcoin market value generated led to $1.56 in global climate damages that month. 

Finally, the authors compared Bitcoin climate damages to damages from other industries and products such as electricity generation from renewable and non-renewable sources, crude oil processing, agricultural meat production, and precious metal mining. 

Climate damages attributable to Bitcoin averaged 35 per cent of its market value between 2016 and 2021. 

This share for Bitcoin was slightly less than the climate damages as a share of market value of electricity produced by natural gas (46 per cent) and gasoline produced from crude oil (41 per cent), but more than those of beef production (33 per cent) and gold mining (4 per cent).  

The authors conclude that significant changes – including potential regulation of the industry – are required to make Bitcoin mining sustainable. 

‘Within broader efforts to mitigate climate change, the policy challenge is creating governance mechanisms for an emergent, decentralized industry, which includes energy-intensive POW [proof-of-work] cryptocurrencies,’ said study author Professor Robert Berrens. 

‘We believe that such efforts would be aided by measurable, empirical signals concerning potentially unsustainable climate damages, in monetary terms.’ 

Bitcoin is the world’s largest cryptocurrency – in December 2021, it had an approximately $960 billion market capitalisation with a roughly 41 per cent global market share among cryptocurrencies.

Last year, billionaire Microsoft co-founder Bill Gates highlighted the negative impact mining Bitcoin has on the environment.

‘Bitcoin uses more electricity per transaction than any other method known to mankind,’ Gates said, speaking to the The New York Times. ‘It’s not a great climate thing.’

A 2018 study published in Nature found huge farms of computers used to mine Bitcoin could produce enough greenhouse gases to raise global temperatures 3.6°F (2°C) in less than three decades.  

Another report published earlier this year also found blockchains that run cryptocurrencies are vulnerable to corruption and potentially stolen funds.