New oil: mining crypts produces so much CO2, which is comparable in damage to beef production and the burning of crude oil

Cryptocurrencies are playing an increasingly important role in the global economy. But despite the fact that they cannot be seen or touched, their production requires resources and leaves a carbon footprint. Conducting transactions and mining cryptocurrencies is impossible without the constant operation of powerful equipment. If earlier there were enough ordinary computers, now the stable operation of the blockchain system requires the work of thousands of crypto farms that consume electricity and emit heat.

It is difficult to estimate the total environmental impact of all cryptocurrencies, but there are studies describing this indicator for the very first and most popular of cryptocurrencies - bitcoin. According to the Cambridge Centre For Alternative Finance (CCAF) research institute, the bitcoin network currently consumes 94 TWh per year, which is comparable to the annual electricity consumption of the Philippines, Kazakhstan, Pakistan or the Netherlands. This gave scientists from the University of New Mexico the reason to call bitcoin “the new oil". According to the study, in the period from 2016 to 2021, for every dollar of the created market value of bitcoin, there was an average of 35 cents of global climate damage. According to this indicator, bitcoin mining is located between beef production and oil burned as gasoline.

However, if we compare bitcoin mining with other areas of the economy, the harm does not look so large-scale. 94 TWh per year is less than 1% of global consumption. For comparison: the annual energy consumption for the operation of refrigerators in the United States is 104 TWh, and the loss of electricity during transmission reaches 206 TWh per year. CCAF also calculated that the annual rate of greenhouse gas emissions into the atmosphere during bitcoin mining is at the level of 48.35 million tons of CO₂, which is 0.1% of global emissions.

The only way out today (if you do not take into account the possibility of a complete rejection of cryptocurrency) is to switch to renewable energy sources. Japan, Canada, and the UK are already using eco-friendly energy sources and are learning to use the heat produced by mining farms to heat homes, greenhouses, and fish farms. The Genesis Mining Enigma mining farm in Iceland operates only on geothermal energy from the Svartsengi power plant.

According to CCAF, the share of green energy sources in mining is 37.6%. Bitcoin Mining Council estimated this figure at 59.5% in the second quarter of 2022.

Do you think the benefits of cryptocurrencies justify such resource costs? Is there an opportunity to abandon their production in favor of ecology?