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Bitcoin climate impact greater than gold mining, study shows | Bitcoin

Bitcoin is less “digital gold” and more “digital beef,” according to a study suggesting the cryptocurrency has a greater climate impact than gold mining and at the level of natural gas extraction or raising livestock for meat.

The University of New Mexico research, published in the journal Scientific Reports, assessed the climate costs of several commodities as a proportion of their total market capitalization.

Some, like coal, cause nearly as much damage as the total value of the market they support, a ratio of 95%, according to the analysis. Other commodities, such as pork production, generate huge climate impacts in absolute terms, but only because the market is so huge.

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Bitcoin, however, is in between the two. According to the economists, climate damage from the production of the digital currency has averaged 35% of the market value over the past five years, with a peak of 82% in 2020.

That’s comparable to beef, which damages 33% of its market, or natural gas, which reaches 46%. And it is much more than gold, the commodity to which cryptocurrency backers compare it most, which has a climate impact of just 4% of its market value, thanks to its huge aggregate value overshadowing the major environmental impact of its mining.

The digital currency’s disproportionate damage to the climate comes from its reliance on a computational process to verify transactions called “proof-of-work mining,” which requires huge electricity expenditures to participate, rewarding those who execute it. with the chance to win some new bitcoins.

In more than a 20 day period over the period the researchers examined, the climate damage from these “bitcoin miners” exceeded the value of the coins produced, overwhelmingly due to that electricity consumption.

Some have argued that renewable energy could meet this demand, but the authors wrote that for every dollar created, the climate damage was 10 times worse for bitcoin than it was for wind and solar — representing “a series of red flags for every consideration.” as a sustainable sector”.

This week, another study into bitcoin’s climate impacts found that the proportion of fossil generation used to provide proof of work was much higher than what proponents have claimed.

Cambridge University’s Bitcoin Electricity Consumption Index has long tracked the estimated power consumption of the bitcoin network, but an update launched this month adds a new dataset to the estimates: a “mining map”. This shows the geographic distribution of bitcoin miners.

Combining that data with previous studies on regional differences in electricity generation, the researchers were able to estimate what share of the generation is renewable.

“The results show that fossil fuels make up almost two-thirds of the total electricity mix (62.4%) and renewables 37.6% (of which 26.3% are renewables and 11.3% nuclear),” wrote Cambridge’s Alexander Neumueller .

“Thus, the findings differ noticeably from industry findings that estimate the share of renewables in bitcoin’s electricity mix at 59.5%.”

While the generation mix is ​​still carbon-intensive, bitcoin’s overall emissions have fallen over the past 12 months due to the sharp decline in the cryptocurrency’s value.

Prices for bitcoin, and thus expected payouts to miners, have fallen by two-thirds, driving some out of business and leading others to cut their operations, cutting emissions by about 14% compared to 2021, the researchers estimate. .

Those emissions are comparable to those of countries such as Nepal or the Central African Republic, the Cambridge team says.

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