Bitcoin's carbon dioxide emissions are mined with those of a small country

Bitcoin is not a natural currency but still affects the planet.

Bitcoin is not a natural currency but still affects the planet. (DepositPhotos /)

Mining all over the world is known for its environmental impact: this is also true for Bitcoin mining. A new analysis by MIT researchers and the University of Munich reveals that the calculations required to produce this encryption consume more energy annually as an American city with more than 400,000 people.

Christian Stoll, who is studying energy use, and colleagues are not the first to try to figure out the power requirements of cryptic extraction, but getting an exact number is not simple, as there are many factors. To reach a number, researchers had to learn more about two variables, Stoll says: how much energy do the computers that make the real use of mines and where they are distributed?

Cryptocurrencies, the best known of which is Bitcoin, is the digital currency that can not be extracted and produced using cryptographic techniques from a decentralized computer network. Bitcoin miners use computer hardware to solve numerical puzzles: each solution helps to validate the coin and produce Bitcoin for the miners themselves. In recent years, as the currency has grown, the number of crisps needed to produce a single Bitcoin has increased more than four times, and with it, the energy required.

"The key to a reliable estimate of power demand is the material that miners use to solve these Bitcoin puzzles," says Stoll. The researchers relied on the information that Bitmain, Canaan and Ebang, the major producers of Bitcoin mining equipment, had to provide as part of their public records as they became listed companies. They then looked at all the different scenarios Bitcoin ate, from individual computers to large businesses, and recorded how much overall power would most likely be used between higher and lower energy efficiency limits.

Total energy use still does not correspond directly to emissions, as different energy production methods produce different amounts of carbon. Mining on a computer powered by solar panels is not as intense as the same program runs on the same device in a coal-using area. To understand this, the researchers looked at the IP addresses of computers, servers and networks involved in the mining process to find their location.

Seeking geographic footprint for mines combined with local emissions through energy consumption and linking it to total energy consumption, the researchers found that Bitcoin's mining produces about 22 million tonnes of carbon dioxide per year. This is close to the production of Kansas City, which has a population of about 489,000 inhabitants. To put it in a global perspective, the writers write, "Bitcoin's productions are among the levels produced by the Jordanian and Sri Lankan nations."

"You need identification as a key ingredient to know how dirty or clean the power these miners are using," says Alex de Vries, a Bitcoin specialist with PriceWaterhouseCooper who did not participate in the study.

In some ways, Bitcoin mining is the ultimate expression of capitalism that disappeared from rails: an individual miner or a mining consortium can make a mad bank, but it comes at the cost of the collective asset. "To keep global warming below two degrees Celsius – as agreed internationally in Paris COP21 – clean carbon emissions in the second half of the century are critical," the researchers write. This adds to a growing set of work that suggests that we may need cryptographic regulations to "protect individuals from themselves and others from their actions," they write.

"Encryption, I would say, is only the first step," says Stoll. Blockchain technology is used elsewhere in things like logistics and even video games. The blockchain is extremely secure and can not be edited or deleted. But given that Bitcoin's energy savings are, Stoll explains, it is worth asking if we should use it at all.

"There have been some demands floating around that Bitcoin mining is green," de Vries says. "This document criticizes it."

Correction: An earlier version of this article reported that mining produces about 22 metric tons of carbon dioxide per year, when it actually produces about 22 million metric tons.