Cryptocurrency, like Bitcoin and Ethereum, might not be something you usually have in your wallet in real life, but it certainly has real-life impacts on the environment. The amount of energy and electricity it takes to feed cryptocurrencies greatly contributes to the number of greenhouse gases emitted into the atmosphere by power plants. According to the Digiconomist, the Bitcoin network "now consumes more energy than a number of countries," including Austria and the Czech Republic, and has a carbon footprint comparable to Denmark's.
The enormous energy hogging of cryptocurrency might not come at a surprise to environmental researchers and digital sustainability enthusiasts, but putting numbers to the cost and damage done by cryptocurrency still eluded them. In order to find these numbers, a team of economic researchers at the University of New Mexico decided to evaluate how much money all that energy use costs and how much damage it's causing to the environment.
It's a particularly important subject to study at a time when communities are struggling with the effects of climate change. Researcher and economics professor Robert Berrens was already used to "estimating the monetary damages, due to health and environmental impacts, of different economics activities and sectors" to understand how different activities and technologies are connected to energy use and consumption. So the team set out to use already existing information about cryptocurrency and energy use to turn the data into dollars.
According to the report, the team estimates that, in 2018, "every $1 of Bitcoin value created was responsible for $0.49 in health and climate damages in the United States." This means that, last year, the environmental damage caused by making Bitcoins cost almost half of a Bitcoin itself.
"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, assistant professor of economics and member of the team. "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."
Despite suggestions and claims that cryptocurrency can come from renewable energy, many cryptocurrency miners value making profits above all. An article published by Vox found that it's more likely for miners to stick to places where electricity is cheap — which often means it's fueled by dirty sources of energy, like coal. These types of fossil fuels produce air pollutants that have been known to increase the risk of an early death in humans.
The team of researchers isn't advocating for a complete tear down of the cryptocurrency system. Instead, by increasing awareness of their study, they hope the tech sector will consider different ways to mine their digital coins. They also expressed concern over a small population of users causing so much environmental and health damage to uninvolved citizens. Andrew Goodkind, another economics researcher who was part of the team, suggested that governments create policies that can force the cryptocurrency community to think about factors other than just mining cheaply.
"How can you make the people who are creating the damage pay for the cost," he wrote, "so that it is considered in the decision in how to mine cryptocurrencies?"