A US study published in the Journal of Nature Climate Change on 29th October 2018 hypothesised that projected Bitcoin usage foretells the cryptocurrency’s mining to produce a carbon footprint large enough to push global warming above 2°C from temperature levels during pre-industrial times by 2033. This is particularly concerning in light of the Intergovernmental Panel on Climate Change’s recent report on the environmental consequences of such a temperature rise. The report’s authors noted that avoidance of the worst consequences of climate change, such as the exposure of population to floods and coral reef extinction, required limiting global warming to below an increase of 1.5°C. While such consequences are grave, and the study presents a captivating hypothesis, global shifts towards decarbonised energy production and energy efficient mining technology may mitigate the potential carbon footprint of Bitcoin mining. At the very least, the US study demonstrates that the climate impact of cryptocurrency mining is worthy of consideration in future projections.
Proof of Work
Blockchains across the board tend to either utilise Proof of Work or Proof of Stake algorithms. Both algorithms act as mechanisms for verifying transactions and maintaining consensus across the blockchain. Cryptocurrencies using the latter algorithm present a minimal carbon footprint as coin holdings are allotted arbitrary mining powers to achieve the same ends. Its predecessor, Proof of Work, is distinct in that computational powers needs to be invested in order to solve progressively difficult algorithms. Bitcoin utilises Proof of Work and the US study signifies that its widespread mining has created considerable externalities on the climate.
To gauge the impact of Bitcoin’s mining, the US scientists looked at the power efficiency of mining hardware, miners’ locations and CO2 emissions from those countries. While emissions from transportation, housing and food remain the primary contributors to ongoing climate change, Bitcoin mining has been identified as a major cause for concern. While this may be the case, it seems that the figures presented by the study may be premature. Aside from global shifts towards decarbonisation and greater mining hardware efficiency, it is also worth noting that much of Bitcoin mining has been shifted away from China to countries with less carbon-heavy electricity generation methods. While the study uses historic trends to predict future developments, it remains noteworthy that Bitcoin’s growth has stagnated over the course of 2018. This may point to an emerging shift towards other cryptocurrencies, most of which are incorporating a Proof of Stake model.
While the concerns raised by the study are legitimate, it seems that the study’s conclusion is closer to “cryptocurrency mining has a carbon footprint” rather than the projected 2°C increase. When thinking about climate change, the integral question we must ask ourselves is whether we are holding the largest contributors accountable. It seems that perhaps such efforts would be better rewarded if focused on the real contributors to climate change, such as the food and shipping industries, rather than industries like blockchain technology which are still in their relative infancy and as such, present a comparatively limited carbon footprint.
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