The latest paper by researchers at the department of economics at the University of New Mexico, published on Sept. 29, alleges that from a climate-damage perspective, Bitcoin operates more like “digital crude” than “digital gold.”
The research attempts to estimate the energy-related climate damage caused by proof-of-work (PoW) Bitcoin mining and make comparisons to other industries. It alleges that between 2016 and 2021, on average each $1.00 in BTC market value created was responsible for $0.35 in global “climate damages,” adding:
“Which as a share of market value is in the range between beef production and crude oil burned as gasoline, and an order-of-magnitude higher than wind and solar power.”
The researchers conclude that the findings represent “a set of red flags for any consideration as a sustainable sector,” adding that it is very unlikely that the Bitcoin network will become sustainable by switching to proof-of-stake:
“If the industry doesn’t shift its production path away from POW, or move towards POS, then this class of digitally scarce goods may need to be regulated, and delay will likely lead to increasing global climate damages.”
Recently, Lachlan Feeney, the founder and CEO of Australian-based blockchain development agency Labrys, told Cointelegraph after the Merge that “the pressure is on” Bitcoin to justify the PoW system over the long term.
There are always counter comparisons and arguments, however. The University of Cambridge currently reports that the Bitcoin network currently consumes 94 terawatt hours (TWh) per year. To put this into context, all of the refrigerators in the United States alone consume more than the entire BTC network at 104 TWh per year.
Furthermore, transmission and distribution electricity losses in the U.S. alone are 206 TWh per year, which could power the Bitcoin network 2.2 times over. Cambridge also reports that the Bitcoin network power demand has decreased by 28% since mid-June. This is likely due to miner capitulations during the bear market and more efficient mining hardware being adopted.
There is also the argument that more mining is now carried out with renewable energy, especially in the U.S. which has seen an influx of mining firms since China’s ban.
Earlier this month, former MicroStrategy CEO Michael Saylor slammed “misinformation and propaganda” regarding the energy usage of the Bitcoin network. He pointed out that metrics show almost 60% of energy for BTC mining comes from sustainable sources and energy efficiency improved by 46% year on year.
Texas, which has become a mining mecca in recent years, is one example where renewables reign — it is the largest producer of wind power in the United States. Several mining operations have also been set up to use excess or otherwise wasted energy such as gas flaring. In August, Cointelegraph also reported that sustainable energy usage for BTC mining has grown nearly 60% in a year, so it is not all doom and gloom.