Mining in the world is renowned for its environmental impact: this is also the case for Bitcoin mining. A new analysis by researchers at MIT and the University of Munich reveals that the calculations required to produce this cryptocurrency consume as much energy each year as a US city of more than 400,000 inhabitants.
Christian Stoll, who studies energy consumption, and his coauthors are not the first to try to calculate the energy needs of cryptocurrency mining, but getting an accurate figure is not simple because many factors are involved. To arrive at a number, researchers had to learn more about two variables, says Stoll: how much energy do computers actually use in mining and where they are distributed.
Cryptocurrencies, the best known of which are Bitcoin, are untraceable digital currencies that are produced using cryptographic techniques by a decentralized computer network. Bitcoin miners use computer hardware to solve numerical puzzles: each solution validates the currency and produces Bitcoin for the miners themselves. In recent years, with the rise of the currency, the number of cuts needed to produce a single bitcoin has quadrupled and the energy needed.
"The key to a reliable estimate of energy demand lies in the hardware used by miners to solve these Bitcoin puzzles," says Stoll. The researchers relied on information that Bitmain, Canaan and Ebang, the main producers of Bitcoin mining equipment, had to provide as part of their IPOs, following their IPO. Next, they examined all the scenarios in which users operate Bitcoin, from simple computers to large operations, and determined the amount of total energy likely to be used between a high and low energy efficiency threshold.
Total energy consumption does not always correspond directly to emissions because different methods of energy production produce different amounts of carbon. Mining on a computer powered by solar panels does not require as much carbon as running the same program on the same device in an area using coal. To understand this, the researchers looked at the IP addresses of the computers, servers, and networks involved in the extraction process to determine their location.
By examining the geographical footprint of the mining industry associated with local emissions related to energy consumption and linking it to total energy consumption, the researchers found that the energy consumption of the energy industry was high. Bitcoin mining produced about 22 million metric tons of carbon dioxide a year. It's close to the production of Kansas City, which has about 489,000 inhabitants. To put this in a global perspective, the authors write, "The emissions produced by Bitcoin are between the levels produced by the nations of Jordan and Sri Lanka".
"Localization is an essential ingredient for knowing how much these miners are using energy," says Alex de Vries, Bitcoin expert at PriceWaterhouseCooper, who did not participate in the study.
In a way, Bitcoin mining is the ultimate expression of capitalism that skids: an individual miner or a consortium of miners can make the bank crazy, but this is done at the expense of good collective. "In order to keep global warming below two degrees Celsius, as internationally agreed at COP21 in Paris, net carbon emissions in the second half of the century are crucial," the researchers write. This adds to a growing body of work suggesting that we may need cryptographic regulations "to protect individuals from themselves and others from their actions," they write.
"Cryptocurrency, I would say, is just the first step," says Stoll. Blockchain technology is used elsewhere, in areas such as logistics and even video games. The Blockchain is highly secure and can not be modified or deleted. But given the importance of mining energy-intensive bitcoins, Stoll says, it's worth asking if we should use it at all.
"Some claims that Bitcoins mining is green are floating," de Vries says. "This paper refutes that."
Correction: A previous version of this article indicated that mining produces about 22 tonnes of carbon dioxide per year while producing approximately 22 million tonnes of carbon dioxide.