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Can a virtual currency have a real-world effect on the climate? Read more

Can a virtual currency have a real-world effect on the climate?

According to a new study by researchers from University of Hawaii at Manoa’s Geography Department, not only could controversial cryptocurrency bitcoin make a noticeable impact; if adopted on a wide scale, its effects on global climate could be catastrophic.

“Bitcoin is a cryptocurrency with heavy hardware requirements, and this obviously translates into large electricity demands,” explained UH graduate student and study co-author Randi Rollins in a news release issued today.

As the authors explain, bitcoin purchases create transactions that are recorded and processed by “miners,” who group bitcoin transactions made during a specific time frame into “blocks,” which are then added to the “chain,” which serves as a public ledger.

“The verification process by miners, who compete to decipher a computationally demanding proof-of-work in exchange for bitcoins, requires large amounts of electricity,” according to the release.

Production of that much electricity results in significant CO2 emissions, which in turn contribute to global warming.

Rollins proposed the idea of studying the impact of bitcoin production and processing on climate change as the department’s annual wide-scale collaborative research effort.

“I didn’t know what bitcoin was at first,” said associate professor of geography Camilo Mora, the study’s lead author. “I thought it was a video game.”

Upon closer investigation, Mora and his colleagues quickly came to realize that despite accounting for a tiny percentage of financial transactions, bitcoin poses a potentially outsize threat to the environment.

Analyzing the power efficiency of computers used in so-called bitcoin mining, the geographic location of likely bitcoin miners, and the CO2 emissions of producing electricity in those countries, the UH researchers estimated that bitcoin accounted for 69 million metric tons of CO2 in 2017 alone.

Studying the rates at which other technologies — from credit cards to air conditioning — have been adopted by society, the researchers conservatively estimated that bitcoin-generated CO2 emissions could increase the surface temperature of the planet more than 2 degrees Celsius within 16 to 22 years. In comparison, Earth’s surface temperature has risen only between 0.7 and 0.9 degree since 1901, an increase that is still considered dire.

“An increase of 2 degrees means the end of the world as we know it,” Mora said.

Mora said the point of the study is not to argue against the adoption of bitcoin, rather to encourage people to recognize and address its potential for significantly contributing to climate change. He said relatively simply adjustments like including more transactions per block could result in more efficient use of electricity and less CO2 emission.

“There is still time to do something before things get out of hand and this goes beyond our capacity to fix,” he said.

The study is published in the science journal Nature Climate Change.