A paper released by the University of New Mexico estimates that around half of all value created by Bitcoin mining last year contributed to health and climate damages, a figure that raised to close to 100 percent towards December 2018.
The paper, “Cryptodamages: Monetary value estimates of the air pollution and human health impacts of cryptocurrency mining”, was written by two assistant professors of Economics, Andrew Goodkind and Benjamin Jones, and a professor of Economics, Robert Berrens. It was published in the journal Energy Research & Social Science.
The paper argued that, despite the financial value that mining practices create, “the rising electricity requirements to produce a single coin can lead to an almost inevitable cliff of negative net social benefit.”
It found that, in 2018, every $1 of bitcoin value created caused health and climate damages totaling $0.49 in the US, and $0.37 in China.
According to a blog post by the university yesterday, “Those damages arise from increased pollutants generated from the burning of fossil fuels used to produce energy, such as carbon dioxide, fine particulate matter, nitrogen oxides and sulfur dioxide. Exposure to some of these pollutants has been linked to increased risk of premature death.”
“Cryptocurrency mining is associated with worse air quality and increased CO2 emissions, which impacts communities and families all across the country,” said Benjamin Jones.
Andrew Goodkind mentioned that methods used to cool the miners, like fans, weren’t included in the study. That means the real cost could be far higher, as powering the fans and other cooling mechanims also requires a lot of electricity. .
The paper recommends the use of alternative consensus mechanisms like proof-of-stake, which don’t require so much electricity.
But the paper also pointed out that implementing public policy to solve the issue is tricky. “The ability to locate cryptomining almost anywhere (i.e. following the cheapest, under-regulated electricity source) …creates significant challenges to implementing regulation,” it stated.
“How can you make the people who are creating the damage pay for the cost, so that it is considered in the decision in how to mine cryptocurrencies?” asked Goodkind.