Recently, there has been a deluge of headlines about the environmental impact of bitcoin mining. Almost every post, tweet, video, etc., quotes Digiconomist and or Cambridge as main evidence and says one or more versions of the following statements;
Comparing Bitcoin to countries and ranking them does a great job of making people feel that Bitcoin is not just one of the biggest sources of emissions already, but really is a disproportionate problem compared to the nearly 200 countries on the planet. .
This comparison is almost always combined with the universal knowledge of Bitcoin’s historical and exponential price-performance, leaving the reader with a powerful and unmistakable impression that if Bitcoin were not regulated it would ruin the planet with its exponential growth. A feeling many authors is happy establish explicitly.
There is a lot to be said about the methodology and limitations of these models (and will be the subject of a later article). However, taking their own data to its full value, the environmental impact of Bitcoin mining is completely immaterial.
Comparison of Digiconomist’s annual emissions with CO2 emissions data from Our world in data, we find that the global share of Bitcoin emissions of around 47 million tonnes of CO2 is only about 0.13% of the global annual total out of around 37 billion tonnes today. This is the same data point used above, but contextualized as any global problem should be, in the context of the whole world. As such, he paints a radically different picture.
Importantly, these are the calculated emissions for Bitcoin now, the largest the Bitcoin network has ever been. While it’s impossible to know the exact number, updating Bitcoin’s exponential growth since 2009 will likely further reduce the average annual emissions for which Bitcoin has been responsible since 2009 by more than half.
Bitcoin has barely been around for 12 years. Data on climate change emissions is measured cumulatively and goes back 270 years to 1750. That’s 21 times longer than Bitcoin has existed. As no one can be 100% sure of Bitcoin’s true impact since 2009, we take the overly conservative approach and project the current share of global Bitcoin issuance until the network is established and historically plot it with the cumulative amount of emissions. Taking this into account, Bitcoin’s share of global emissions measured to date becomes even smaller, around 0.028% using this very conservative approach.
It is important to note the scales of these graphs. As Bitcoin’s share in measured global emissions is so infinitely small that it is not possible to render a full-sized graph that accurately represents Bitcoin’s share in global emissions measured to date. Such a graphic would be too small to be visible to the human eye.
Finally, there is also a small provision with the annual CO2 emissions of Our World In Data. It only measures CO2 emissions from the combustion of fossil fuels for energy and cement production. Land use change is not included. As energy and cement only account for about 76.2% of global energy consumption, we need to refresh 24%, which means that the current global share of Bitcoin’s measured emissions is only around 0.098%, which is less than a tenth of 1%.
Why is this important?
It is quite clear that climate change existed before Bitcoin.
Bitcoin did not cause climate change. Does Bitcoin Have Emissions? Yes, all things do. But its emissions as a percentage of the world total are totally insignificant.
If you are sincere about reducing emissions, you must also want to reduce them so that you get the best mix of the most reduced emissions, at the lowest cost, and at the fastest rate possible. The basic economic principle of marginal utility makes it clear that reducing the small amount of Bitcoin emissions to zero would require an excessive amount of money and effort per unit of reduction. There are, however, many industries where the same amount of capital and effort applied, would have a significantly larger and measurable reduction in emissions due to their current scale. If your goal is to reduce emissions, Bitcoin mining is one of the least efficient and meaningful goals you can have.
It should be clear at this point that “Bitcoin’s climate change problem” has nothing to do with emissions and everything to do with trying to build support and rationale for regulating the world’s freest market, bitcoin mining.
This is a guest article by Ben Gagnon. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.