University of New Mexico Research: Mining $1 In Bitcoin Creates $.49 In Climate and Health Damages
Bitcoin’s popularity over the past two years has increased tremendously which ultimately affected the mining activity of this market leader within digital currency. However, critics have in the past raised concerns regarding the harmful effects that BTC mining brings along given its high energy-consuming nature.
The University of New Mexico recently published a paper that estimates half of the value realized from Bitcoin mining to have caused climate and health damages. According to the research by Benjamin Jones and Andrew Goodkind, assistant professors, there is financial gain from mining BTC but a social cost has to be paid in the process.
Bitcoin Mining Power Consumption at 0.25% of the World’s Electricity
BTC mining has evolved over time from CPU to GPU and currently special mining machines with Bitmain leading the manufacturing scene. Stats show that BTC mining consumes around 0.25% of the world’s electricity with China and U.S as the leading jurisdictions. The research by Benjamin and Andrew highlights that the health cost of $1 BTC mining revenue is at $0.49 and $0.37 for U.S and China respectively.
Benjamin further emphasized on the harmful nature of crypto mining;
“Cryptocurrency mining is associated with worse air quality and increased CO2 emissions, which impacts communities and families all across the country,”
James Todaro, Blocktown Capital’s Managing Partner, has noted that the fact that BTC uses a significant amount of energy shows it might be here to stay. This is because other technologies like TV’s which use higher levels of electricity globally started out in a similar version. However, Bitcoin’s use globally may take over 20 years to reach the 50% mark.
The research paper from University of New Mexico recommended a Proof-of-Stake consensus for crypto projects to reduce mining costs. According to Andrew, they had not included cooling fan costs which shows the effect might be greater than their estimates. This can be alternatively solved with better policies although the question becomes on how to effect a social cost for the BTC miners.