New research has found that Bitcoin mining is so energy intensive that it is threatening the Paris Agreement on mitigating greenhouse gas emissions.
The research was published by Dr. Jon Truby, associate professor of law and director of the Centre for Law and Development at Qatar University.
He stated that Bitcoin’s advantages are being overshadowed by the “intentionally resource-intensive design in its transaction verification process.” It is this, he argues, that is threatening our climate. He adds, though, that the blockchain has “significant social and economic benefits.” However, that verification process, combined with Bitcoin mining, is threatening the Paris Agreement to mitigate greenhouse gas emissions. Truby writes:
Despite digital currencies providing considerable potential transactional, security, and financial access benefits, the design of Bitcoin’s mining and trading system requires such a vast consumption of electricity that it is equivalent to powering Denmark.
He adds that intervention is necessary to prevent similar models from appearing. At the time of writing, Bitcoin is trading at $7,422, according to CoinMarketCap. Mid-December, it was within touching distance of $20,000. Yet, in Truby’s opinion, when it rises in value again, this will be an incentive for people to mine it. This will then produce a worsening problem.
Figures from the Bitcoin Energy Consumption Index show yearly electricity consumption stands at over 73.12 TWh. This is up by nearly 400 percent over the last 12 months. Going back to February 2017, that is an increase of over 660 percent. The index’s figures suggest that Bitcoin mining is the closest to Austria in terms of electricity consumption.
Truby writes that government intervention is a possibility, adding that:
The decision to intervene in the free market is never an easy one.
However, he cites John Stuart Mill’s utilitarian justification for intervention:
…the only purpose for which power can be rightfully exercised over any member of a civilised community, against his will, is to prevent harm to others.
In this case, Truby is of the opinion that Bitcoin mining is harming others, warranting intervention. He notes that the Agreement states that technology should be used to mitigate emissions. However, polluting technology would “very much go against … the agreement.”
However, it should also be noted that there is some dissension about how much energy Bitcoin mining is consuming. CoinShares Research analysts Christopher Bendiksen and Samuel Gibbons report that cryptocurrency mining only uses roughly half the accepted figures. They point out that many mining operations have moved to colder climates, thus reducing energy costs for cooling. They also say that more efficient technology, which improves on a yearly basis, requires less power than older technology. They state:
Our total findings suggest that the bitcoin mining industry is relatively healthy, profitable and continues to grow at breakneck speeds. The hash rate is tripling on an annual basis while the efficiency of the hardware is rapidly increasing and costs are coming down.
Do you think Bitcoin mining is a threat to the Paris Agreement? Let us know in the comments below.
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