Introduction to Bitcoin Mining
Bitcoin mining in 2020 used more energy than Austria or Portugal, and its emissions as a proportion of market value were comparable to the meat industry, a brand new study has found. The research, published in Scientific Reports, calculated the energy intensity of Bitcoin mining and annual emissions from mining between 2016 and 2021. Using those figures, the researchers estimated the potential cost from climate and health impacts that those emissions would incur.
Key Findings
The study found that Bitcoin mining used, on average, greater than 75 terawatt-hours per 12 months — greater than the energy budget of some countries. Between 2016 and 2021, emissions to provide each coin increased from under a tonne to 113 tonnes per coin, in accordance with the researchers. When they compared the potential cost of climate damages from those emissions with other industry emissions, as a proportion of their market value, they found Bitcoin mining was more cost effective than fossil fuel production, but barely more costly than beef production.
The Energy-Intensive Model of Bitcoin
Bitcoin uses the "proof of labor" or PoW protocol. This gives the currency built-in security, but in addition makes it intentionally laborious to mine, in accordance with economist John Hawkins from the University of Canberra. Essentially, how proof of labor operates is transactions are verified by computers solving mathematical problems that, once solved, are easy to ascertain. But as mining competition grows, the system adjusts to make the equations tougher. That’s created an "arms race", Dr Hawkins said, with ever-more processing power needed to mine the coins.
The Environmental Impact
The code is wasteful by design, and can proceed to make use of more energy as mining competition grows. Though some cryptocurrency miners claim to make use of renewable energy for mining, placing more demand on the general grid still increased the demand for fossil fuels, said economist John Quiggin of the University of Queensland. "The excuses Bitcoin fans make, that they use renewable energy, sometimes don’t rise up," Professor Quiggin said.
Cleaner Alternatives
There are alternatives to the Bitcoin model. Ethereum, probably the most popular cryptocurrencies behind Bitcoin, has switched from proof of labor to "proof of stake", or PoS. Under that system, crypto transactions are validated by other Ethereum owners who stake large quantities of their blockchain tokens or coins, as collateral. Ethereum estimates the switch, which was made this 12 months, will reduce emissions by as much as 99 per cent.
The Challenge of Changing the Model
Though the switch in models appears to be going well for Ethereum, Dr Hawkins said it was a really difficult process, and there is more likely to be resistance throughout the crypto community to Bitcoin following suit. "Some people said it was like trying to vary the engine within the plane while it was flying," he said. "There are these hardline Bitcoin fanatics saying, ‘you may’t change Bitcoin.’" And since the cryptocurrency is a decentralized platform, it’s extremely difficult for governments to force them to vary their practices, he said.
Calls for Change
Greenpeace USA has launched a campaign called "Change the Code, Not the Climate" to attempt to pressure Bitcoin to vary to the same model to Ethereum. In a press release last month, Greenpeace USA special project manager Rolf Skar said it was incumbent on firms using Bitcoin to force the change. "We’re in a climate crisis and everybody has a responsibility to act," Mr Skar said. "With Ethereum’s move to an energy-efficient protocol, it is time for Bitcoin to vary. Companies promoting and making the most of Bitcoin, like Fidelity Investments, BlackRock, Paypal and Block, have a responsibility to be an element of constructing a greater, climate-friendly Bitcoin."
Conclusion
In conclusion, the energy-intensive model of Bitcoin mining has significant environmental impacts, and it is important to contemplate alternative models that may reduce emissions. The switch to proof of stake by Ethereum is a step in the precise direction, and it’s crucial for Bitcoin to follow suit. The crypto community, firms, and governments must work together to deal with the climate crisis and create a more sustainable future for cryptocurrencies.
