The criticisms of Bitcoin (BTC) persist even during a market downturn, with ongoing research raising concerns about its energy consumption and environmental consequences.
In a recent paper by economists at the University of New Mexico, published on Sept. 29, it is suggested that Bitcoin, from a climate perspective, resembles “digital crude” more than “digital gold.”
The study aims to calculate the climate damage caused by proof-of-work Bitcoin mining in terms of energy usage and compare it to other industries. It claims that between 2016 and 2021, each $1 in BTC market value generated was accountable for $0.35 in global “climate damages,” positioning it in a range comparable to beef production and gasoline burned from crude oil, but notably higher than wind and solar energy.
The researchers caution that these findings raise concerns about Bitcoin’s sustainability as an industry. They believe that without a shift away from proof-of-work (POW) or transition to proof-of-stake (POS), regulation may be necessary, and delays could lead to increased global climate impacts.
Lachlan Feeney, CEO of Labrys, an Australian blockchain development agency, noted that there is mounting pressure for Bitcoin to justify its proof-of-work system in the long run.
There are contrasting perspectives on the issue. The University of Cambridge currently documents that the Bitcoin network consumes 94 terawatt hours (TWh) annually. To provide context, U.S. refrigerators alone use more energy at 104 TWh per year.
Moreover, the U.S. loses 206 TWh yearly in electricity transmission and distribution, an amount that could power the Bitcoin network twice over. The Cambridge report also highlights a 28% decline in Bitcoin network power demand since mid-June, likely due to miner reactions to market conditions and the adoption of more efficient mining hardware.
Advocates point out that an increasing number of mining operations now utilize renewable energy sources, particularly in the U.S. following China’s ban on mining. Michael Saylor, former MicroStrategy CEO, denounced misinformation regarding Bitcoin’s energy usage and stated that almost 60% of BTC mining energy is sustainable, with a 46% annual improvement in energy efficiency.
States like Texas, a hub for mining, lead in renewable energy production with substantial wind power. Some mining facilities also repurpose wasted energy like gas flaring. Recent reports indicate a nearly 60% growth in sustainable energy use for BTC mining within a year, suggesting a positive trend in the sector.
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