Researchers call BTC “digital crude” because of the climate damage

What’s new? Researchers at the department of economics at the University of New Mexico have said that bitcoin is more like “digital crude” than “digital gold” in terms of climate damage. The scientists’ paper claims that between 2016 and 2021, for each dollar in BTC market value created, there was an average of $0,35 in global “climate damages.” They argue that on this scale, bitcoin mining “is in the range between beef production and crude oil burned as gasoline, and an order-of-magnitude higher than wind and solar power.”

Article by the department of economics of the University of New Mexico

What else does the study say? According to scientists, the findings suggest that the industry poses a threat to sustainable development. In addition, the Bitcoin network’s switch from the Proof of Work (PoW) consensus algorithm to Proof of Stake (PoS) is unlikely to change the situation, they added. In their opinion, the industry will need regulation if it does not move to PoS, but delays in putting the necessary measures in place will lead to increasing global climate damage.

That said, the University of Cambridge reports that the bitcoin network currently consumes 94 TWh per year. By comparison, all refrigerators in the United States consume more than the entire BTC network — 104 TWh per year. In addition, transmission and distribution electricity losses are 206 TWh per year in the US alone. The solution to this problem could increase the capacity of the asset’s network by 2,2 times.

Cambridge estimates that the bitcoin network’s power consumption has dropped by 28% since mid-June. This is probably due to the capitulation of miners during the bear market and the adoption of more efficient cryptocurrency mining equipment.

Earlier, the US authorities allowed the possibility of banning mining because of its impact on the environment. The White House suggested that miners reduce greenhouse gas emissions with the participation of the Environmental Protection Agency (EPA), the Department of Energy, and other federal agencies, which should also develop environmental standards for the industry. The head of the Cardano blockchain Charles Hoskinson later warned that these recommendations could lead to a complete ban on bitcoin.

In September, the non-governmental Environmental Working Group launched an advertising campaign to move bitcoin to the PoS algorithm That same month, environmental groups sent a call to the US government asking for restrictions on new cryptocurrency mining operations.