Bitcoin mining can be a lucrative enterprise for the people with enough computing power to solve the complex equations that form the base of the cryptocurrency, but the rest of us may be paying for it indirectly.
Every $1 in bitcoin value created in 2018 was responsible for $0.49 in health and climate damage to the U.S., researchers from the University of New Mexico estimated in a new study published in the journal Energy Research & Social Science.
Bitcoin miners user powerful computers to quickly solve the equations that validate new currency on the digital exchange. And cryptocurrency owners’ computers are used to publicly record the blockchain of all the transactions.
That all adds up to “exorbitant amounts of energy,” according to the researchers.
“What is most striking about this research is that it shows that the health and environmental costs of cryptocurrency mining are substantial; larger perhaps than most people realized,” said Benjamin Jones, a UNM assistant professor at economics and one of the study’s authors.
The researchers, a team of economics professors, are experts in estimating monetary damages related to production and consumption. They looked at factors like greenhouse gas emissions from electricity production and the impacts from pollution.
At one point last year, the cost in damages to create bitcoin matched the value of the exchange, the researchers found.
“By using large amounts of electricity generated from burning fossil fuels, cryptocurrency mining is associated with worse air quality and increased CO2 emissions, which impacts communities and families all across the country, including here in New Mexico,” Jones said in a press release.
There are some other cryptocurrencies that are produced differently than bitcoin and use a lot less energy, the researchers said. Andrew Goodkind, a UNM assistant professor of economics and the lead author on the study, said the report didn’t even account for the full energy usage associated with bitcoin mining because they didn’t look at power used to cool the computers as they work.
Goodkind said the researchers hope to encourage new methods of mining that use less energy.
“How can you make the people who are creating the damage pay for the cost,” he asked, “so that it is considered in the decision in how to mine cryptocurrencies?”