Sun Sentinel Palm Beach Edition
Digital money may be a drain
Cryptocurrencies’ outsized use of energy threatens to damage the environment
The stock market debut of Coinbase, a startup that facilitates the buying and selling of cryptocurrencies like Bitcoin, is a watershed moment for digital money.
It also threatens to lock in a technology with an astonishing environmental footprint.
Cryptocurrencies use blockchain technology, which relies on specialized computers racing to solve complex equations, making quintillions of attempts a second to verify transactions. It’s that practice, called “cryptomining,” that makes the currencies so energy-intensive.
Researchers at Cambridge University estimate that mining Bitcoin, the most popular blockchain-based currency, uses more electricity than entire countries like Argentina do.
“All this accounts for so little of the world’s total transactions, yet has the carbon footprint of entire countries. So imagine it taking off — it’ll ruin the planet,” said Camilo Mora, a climate scientist at the University of Hawaii at Manoa.
Mora argued in a controversial 2018 paper that Bitcoin emissions alone could push global warming above the Paris Agreement target of 2 degrees Celsius, a level beyond which scientists warn the world will experience evermore-catastrophic effects of climate change. (Some of the paper’s assumptions have since been called out as implausible.)
Still, cryptocurrencies’ heavy environmental toll is starting to roil climate policy.
In a new paper published this month, researchers warned that, if left unchecked, Bitcoin mining in China — where an estimated two-thirds of the world’s blockchain mining takes place — could make it difficult for the world’s largest polluter to meet its climate goals.
Coinbase, on its website, calls the notion that Bitcoin is bad for the environment a “myth.” It points to finance-industry research that calls the digital currency’s energy consumption trivial compared to traditional banking. But though their use is surging, cryptocurrencies still account for just a fraction of global transactions.
Alex de Vries, who keeps track of the use on the site Digiconomist, estimates that each Bitcoin transaction requires tens of thousands of times more electricity to process than each Visa credit card transaction, for example.
Bitcoin mining’s heavy energy usage owes in large part to its reliance on what’s called “proof of work” — a computing method that’s intentionally designed to be inefficient to keep currencies transparent and decentralized.
Proof of work forces miners to compete to solve cryptographic puzzles in an intense race of trial and error, their computers together making more than 160 quintillion attempts a second to produce a new block. This competition keeps immense numbers of computers working at top speed, around the clock and all over the world.
“The mechanism of proof of work is kind of counterintuitive,” said Susanne Köhler, a researcher at Aalborg University in Denmark who has carried out life-cycle analysis of blockchain technology.
“While the machines are getting more efficient, the network does not reduce energy consumption,” because an ever-growing number of miners must compete, making an ever-growing number of guesses, she said.