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It's known that bitcoin has a high carbon footprint [1].
Some have started to compare the environmental footprint of a bitcoin transaction and a standard visa transaction [2].
What is the carbon footprint of traditional cash? Is cash the most sustainable money?
[1]: One Bitcoin Transaction Now Uses as Much Energy as Your House in a Week
[2]: A Single Bitcoin Transaction Takes Thousands of Times More Energy Than a Credit Card Swipe
Very low.
I'm going to use manufacturing costs as a proxy for environmental footprint. This is realistic up to the point that ignores extrinsic costs, and ignores financial costs. E.g. making the paper can be done with essentially no carbon foot print, or a fairly large one. In general I regard costs as being a good first order proxy, unless you can show some unusual circumstances.
The bitcoin calculations have to be redone on a transactional basis. Suppose that this was cheap and only took a kWh of electricity. Then the cost per transaction, ignoring equipment would be on the close order of 10 cents.
A debit card transaction typically costs the merchant 15 to 35 cents. The biggest part of this is to the company that runs the database. The non-material costs are a large fraction of this. (Where my proxy breaks down...) E.g. Database, data centre, are all manufactures that need to be amortized over all the transacations, but advertising, marketing both to customers and to merchants, dispute handling. I will arbitrarily call the cost of this transaction 1/2 of the merchant fee at 10-20 cents.
Credit cards, for reasons I don't know, are much more expensive for the merchant. Partly fraud, partly borrowed money, mostly making credit card companies wealthy. There is no intrinsic reason for it to be different from debit card. This difference is another example of monetary cost not being a good proxy for footprint.
While a dollar bill costs money to make, it will be used in hundreds of transactions before being retired as worn out. And a 20 dollar bill costs about the same as a one dollar bill to make. (The Fed's website says 5 to 20 cents for a paper bill. The $50 is the most expensive to produce.)
Reference: https://www.federalreserve.gov/faqs/currency_12771.htm
Bills last 5-20 years, with higher denominations lasting longer, as they are often used to 'store' value.
Figure that a bill on the average is taken out of a bank machine, and likely spent within two weeks. The shop keeper deposits it. So there is two transactions. Buyer to shop keeper, shopkeeper to bank. If it's a smaller bill, it has about a 50% chance of being used for making change, I'm guessing. So call it 5 transactions per month. 5 years then means a bill is used in about 300 transactions. This is a sloppy estimate. Could be as low as 100. Might be as much as a thousand.
Coins often cost more to make than their face value (especially true for small value coins) but a coin will be used for thousands of transactions. The penny costs 1.6 c to make, the nickle 8.5 c, according to an article in the washingtoon post. The others cost less to make than their face value.
According to the Royal Mint, british coins have an average life span of 40 years. No details about how they got this figure. In particular I don't know if they correct for the increased number of coins in circulation.
http://www.royalmint.com/help/help/life-expectancy-of-a-coin
Very high.
Cash needs to be transported. Transportation is the biggest evil. For example, it is almost always better to work remotely than to travel to your workplace (unless you live very near; most don't). Card payments are electronic. Nobody needs to haul around the cards in a minivan.
Not only that, but cash use reduces; the need to do regular transportation to haul a diminishing amount of cash doesn't. In contrast, Moore's law is continuously reducing the environmental impact of computer systems. A server of today is more powerful than a server of yesterday, and uses less electricity.
Newspaper source: https://www.bloomberg.com/news/articles/2018-10-16/pick-card-payments-over-cash-and-the-environment-will-thank-you and original source: https://www.dnb.nl/binaries/Working%20paper%20No.%20610_tcm46-379441.pdf
These people who have answered are ignoring some major factors in cash production. Mining the metals for coins, with the trucks, transportation of materials, disposal of waste, facilities to process, smelting, and so on on a micro level have an enormous impact. If not using recycled paper, or only a portion of recycled paper, consider the deforestation impact, transportation of materials from both recycling facility and paper processing plants, the facilities/plants themselves, the workers in all of these situations driving to and from their jobs, all have environmental impacts.
This isn't even to begin considering what it takes to transport the currency to banks, the cost/impact of having a bank on every street corner, again arriving at employees' traveling to/from work, and the very obvious travel of customers to/from the bank sites to do business as well as the plastics produced from their bank-issued debit/credit cards (and the facilities necessary to make them).
When considering a carbon footprint, failing to account for ALL aspects of the footprint gives you only a portion of the truth. While, yes, Bitcoin and other cryptocurrencies appear to have a higher up front impact on the environment, the truth is that the entire impact of Bitcoin is accounted for whereas analysts have repeatedly failed to link all carbon processes to the footprint of fiat currencies. It's a no-brainer that cryptocurrencies are the greener option.
If it was only about emissions, you'd have an easy time answering. But it's not. Fiat currencies have been the cause of recessions, on average, every 5.6 years because actual currency production affects the economy overall. They're a means to control inflation in a boom-bust capacity and have historically led to some of the worst crises in human history. Cryptocurrency, in my opinion, is by far the more stable, efficient, and globally-friendly option and the future of currency on a global scale.
(This is not meant to be a full answer but rather a complement to the other answers).
When evaluating the carbon footprint of any form of money you don't only need to look at the economic and environmental cost of manufacturing units of currency (cash), specially in occidental societies who are converging towards chashless economies. Instad, you need to look at the cost of securing accounts and transactions.
In decentralized, digital networks (eg. bitcoin) the security cost is mainly given by the cost of the consensus protocol (ie. mining—but there are other more environmental-friendly alternatives like Proof-of-stake).
With fiat money, the security cost relates to:
I'd love to put some numbers to all of this, but that would probably take a lot of time.
From my quick skim of the above, none of these seem to take into account the water, paper, ink, and toxic waste created. The energy burn for each of these processes and the amount of time if ever it takes for this waste to degrade enough to be able to use the land it’s stored in. The problem any analysis is that the user chooses only a few parts of the argument that for their narrative or make their rival look bad.
