Many consider cryptocurrency as the future mode of monetary transactions. However, a recent research has flagged a serious concern of environmental damage associated with producing cryptocurrencies. The research states that carbon emissions for mining a single bitcoin have risen 126-fold, from 0.9 tons in 2016 to 113 tons in 2021.
What does the research say?
The research recently published in the scientific journal Nature shows that the climate harm caused by creating the cryptocurrency has averaged 35% of its market value in the previous five years, rising to 82% in 2020.
That is comparable to the harm caused by beef, which accounts for 33% of its market, or natural gas, which accounts for 46%. And it is much higher than gold (4% of its market), the commodity that supporters of the cryptocurrency most often equate it to.
The research explains citing data from Cambridge University, most electricity used to mine POW cryptocurrencies comes from coal and natural gas.
Even if mining is powered by renewables, the research mentions, it would not be a sustainable sector as the climate damage for each dollar of value created was 10 times worse for bitcoin than for wind and solar generation.
What is the reason for this immense carbon emission?
The cause of this immense pollution lies in the very technology which makes blockchain so robust. The research says the proof-of-work (POW) blockchain technology adopted by Bitcoin (BTC) is energy demanding.
It is a widely used decentralised consensus mechanism in crypto mining. In order to prevent anyone from abusing the system, the POW requires ‘miners’ to solve a random mathematical algorithm and, in lieu of this, are rewarded with a new cryptocurrency.
As it is a competitive consensus-driven verification process that leads to competition forming a “winner-take-all” game, miners from around the globe compete simultaneously. Miners apply extremely specialised computer equipment and machinery (known as “mining rigs”) that uses substantial energy to work competitively. Thus, this makes it a very energy-intensive process, the research states.
Although there is a dip in overall emissions of bitcoin in the past 12 months, the research attributes it only to the ongoing slump in the cryptocurrency economy.