Mining Bitcoin is 3.5 times more expensive than digging up gold

Bitcoin (CRYPTO: BTC) fans have often spruiked the cryptocurrency as a store of value when other assets like shares and real estate hit turbulence.

This is a role traditionally performed by gold for many centuries.

“Amongst retail investors it is increasingly regarded as a ‘safe haven’ asset, similar to gold,” said DeVere Group chief executive Nigel Green.

But one concern that’s become prominent in recent years is the amount of computing power required to mine new Bitcoins.

Mining involves solving extremely complicated mathematical calculations on very powerful computers. This requires a tremendous amount of energy, both to power the computers and to house them.

Some Bitcoin mining data centres are deliberately located in cold locations like Siberia to use less energy to cool the data centres.

All this leads to the question of the environmental impact of creating new coins.

It’s not a physical asset but has physical impacts

In response, Bitcoin bulls have always argued there is a greater environmental cost to mine gold.

Gold obviously has to be physically discovered then dug up out of the ground and processed.

But now it seems that argument is on shaky ground.

A new study has shown how generating Bitcoin takes up more energy than mining the same value of gold out of the earth.

According to the Bankless Times, mining US$1 worth of Bitcoin uses 17 megajoules of energy, while digging up the same value of gold costs 5MJ.

“Although both assets consume quite a bit of energy, Bitcoin’s consumption is comparably higher since the network still needs electricity to complete transactions and continue functioning,” reported the Times.

The cryptocurrency fares even worse when the impact is translated to the carbon footprint.

“Following the surge in the number of users, Bitcoin’s carbon footprint is currently about 15 times that of gold,” stated the Bankless Times.

“Mining 1 Bitcoin emits about 191 tonnes of carbon dioxide, while mining gold worth 1 Bitcoin emits about only 13 tonnes.”

What does 191 tonnes of carbon dioxide mean exactly?

According to the Times, that’s the same amount of carbon released from 1.6 million Visa Inc (NYSE: V) transactions.

China’s crypto ban made Bitcoin even dirtier

As the environmental concerns about Bitcoin mining have come into public consciousness, some industry players have taken steps to address the problem.

Many have promised to only use renewable energy sources to power the computers.

But China’s ban on cryptocurrencies last year was a major setback in this movement.

“Before the ban, miners in China would use hydropower to mine Bitcoins, especially during the wet season,” stated the Times.

“This helped a great deal with keeping Bitcoin mining green.”

The post Mining Bitcoin is 3.5 times more expensive than digging up gold appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo owns Bitcoin. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Bitcoin. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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