A new paper indicates that the energy required to mine cryptocurrencies is more than what is consumed when excavating for metals of equivalent dollar value.
In the paper which was published on November 5 by the Nature journal, researchers at the Cincinnati, Ohio-based Oak Ridge Institute noted that bitcoin consumes more than three times the energy taken to produce an equivalent value of gold in dollar terms.
According to the report, between the beginning of 2016 and mid this year, the energy required to mine bitcoin worth US$ 1 was 17 megajoules while the energy required to mine gold of the equivalent dollar value was 5 megajoules. Other cryptocurrencies such as litecoin, ethereum and monero also required more energy to mine than gold of equivalent value.
Aluminum – the Energy Guzzler of Metals
The only metals whose mining process consumed more energy than the equivalent dollar value of bitcoin and the three other major cryptocurrencies were aluminum, which required 122 megajoules, and rare earth oxides (REOs), which required 9 megajoules. Platinum Group Metals (PGMs) consumed just as much energy as what it took to mine ethereum and litecoin – 7 megajoules.
“As an average of all days from 1 January 2016 to 30 June 2018, to generate US$ 1, we estimate that Bitcoin, Ethereum, Litecoin and Monero mining required 17, 7, 7 and 14 MJ, respectively. In comparison, we estimate that mining aluminum, copper, gold, PGMs and REOs required 122, 4, 5, 7 and 9 MJ to generate US$ 1,” noted the paper titled ‘Quantification of energy and carbon costs for mining cryptocurrencies’.
Additionally, the paper observed that the carbon footprint left by the mining of cryptocurrencies is dependent on the country where the activity is taking place. With Canada possessing cheaper and cleaner energy than China, for instance, crypto mining in the latter was found to be releasing four times the carbon emissions of the former on average.
Unlike another recent research paper which painted a doomsday scenario projecting that the mining of cryptocurrencies will have catastrophic effects on the environment, the paper written by Max J. Krause and Thabet Tolaymat, instead notes that the adoption of new technologies could minimize the impact citing the example of Monero’s hard fork and the planned change in the consensus mechanism of Ethereum:
“…Monero’s hard fork … on 6 April 2018, … indicates a considerable drop in network energy demand. Moreover, Ethereum’s future move to proof-of-stake could reduce long-term network energy requirements. Therefore, future environmental impacts for any of the cryptocurrencies on a per-coin-mined basis may be greater or less than those determined in our current assessment.”
The Oak Ridge Institute study comes around two months since it was reported that the mining of gold requires 20 times more energy than bitcoin.
However, as noted at the time, the figure did not compare the equivalent dollar value of what was mined but rather the total amount of energy consumed in mining bitcoin versus what was expended in producing gold per year. The value of gold or bitcoin produced in the estimate was thus not taken into account.
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