Elon Musk’s announcement that Telsa will no longer accept Bitcoin payments for its electric vehicles because of concerns over the impact to the environment is credited with helping pull down the price of Bitcoin by more than 10 percent.
Musk shook the cryptocurrencies market when he tweeted on May 12 that he was “concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal.”
His concerns are not new. Environmental advocates have long decried Bitcoin’s growing popularity and were especially noisy about it in the days leading to Earth Day this year – for its increased electricity consumption.
The environmental impact of Bitcoin and other cryptocurrency mining is perhaps the most contentious debate in the digital-asset space in 2021. Many have so far accepted that Bitcoin mining is indeed an environmental scourge because of the amount of energy needed to function.
A decommissioned coal power plant is roaring back to life in upstate New York as cryptocurrency mining companies look for alternative power sources for their activities. The company behind the coal power plant plans to go public later this year, saying it expects to become “the only U.S. publicly listed bitcoin mining operation with its own power source”.
In China, the number of mined Bitcoins dropped significantly after an immense coal plant in Xinjiang flooded and shut down over the weekend of April 17–18. The blackout halted at least a third of all of Bitcoin’s global computing power.
Academicians have for years measured the intensity of cryptocurrency mining and its impact on the environment. The conclusion is it’s harmful. Governments and banking institutions including the European Central Bank and Italy’s Central Bank, are beginning to listen.
It is estimated that Bitcoin may soon consume more power than all of Australia and almost 10 times more than Google, Microsoft and Facebook combined.
Some say that Bitcoin could help the environment.
Following concerns raised by Musk about Bitcoin’s energy consumption, global asset manager Ark Investment Management released a report arguing that the concerns are “misguided.”
Ark Invest insists that “the impact of bitcoin mining could become a net positive to the environment.”
Industry researchers have also pushed back, claiming that Bitcoin contributes to just 2.3 percent of digital tech emissions.
Here are 25 quotes on how Bitcoin impacts the environment.
“Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment.” [SmartCompany]
“I don’t think that bitcoin … is widely used as a transaction mechanism. To the extent it is used I fear it’s often for illicit finance. It’s an extremely inefficient way of conducting transactions, and the amount of energy that’s consumed in processing those transactions is staggering.” [CNBC]
“The more successful bitcoin gets, the higher the price goes; the higher the price goes, the more competition for bitcoin; and thus, the more energy is expended to mine.” [CNBC]
“Since the fundamental value of bitcoin is zero and would be negative if a proper carbon tax was applied to its massive polluting energy-hogging production, I predict that the current bubble will eventually end in another bust.” [Business Insider]
“As mayor of NYC – the world’s financial capital – I would invest in making the city a hub for BTC and other cryptocurrencies” (Twitter)
“Bitcoin alone consumes as much electricity as a medium-sized European country. This is a stunning amount of electricity. It’s a dirty business. It’s a dirty currency.” [FinanciaTimes]
“In our view, the concerns around Bitcoin’s energy consumption are misguided. Contrary to consensus thinking, we believe the impact of bitcoin mining could become a net positive to the environment … We illustrate that renewables would be able to satisfy only 40% of the grid’s needs in the absence of bitcoin mining but 99% with the commercial ‘subsidies’ associated with bitcoin mining.” [Seeking Alpha]
“As with every other energy-consuming industry, it’s up to the crypto community to acknowledge and address these environmental concerns, work in good faith to reduce Bitcoin’s carbon footprint, and ultimately demonstrate that the societal value Bitcoin provides is worth the resources needed to sustain it.” [HBR]
“Bitcoin uses more electricity per transaction than any other method known to mankind, and so it’s not a great climate thing.”
“Bitcoin’s climate footprint of 37Mt CO2 is still minuscule compared to other digital industries. The total GHG emissions from digital tech are estimated to 1600Mt, with Bitcoin contributing to roughly 2.3% of the digital tech emissions.” (Twitter)
“It is really by design that Bitcoin consumes that much electricity. This is not something that will change in the future unless the Bitcoin price is going to significantly go down.”
“Although we agree the amounts are ludicrous right now, that is still half as much as inactive home appliances in the U.S. consumed.” [CNBC]
“It doesn’t really matter whether there are new, more efficient machines on the market. You will just use more and more machines but the total electricity consumption won’t go down based off of that.” [CNBC]
“Bitcoin is literally anti-efficient. So more efficient mining hardware won’t help – it’ll just be competing against other efficient mining hardware. This means that Bitcoin’s energy use, and hence its CO2 production, only spirals outwards. It’s very bad that all this energy is being literally wasted in a lottery.” [BBC]
“What we have here is people trying to decide what is or is not a good use of energy, and bitcoin is incredibly transparent in its energy use while other industries are much more opaque.” [CNBC]
“[The] fast-growing hunger for electricity is just an early symptom of a much bigger problem to come. As online services become bigger and more complex, the demand for computing power is bound to go up over the next few years, and that will require more energy.” [CNBC]
“More and more electricity is being used. That means that the network difficulty will also be going up (and) more miners are coming in because the hash rate’s going up.” [CNBC]
“Environmental matters are an incredibly sensitive subject right now, and Tesla’s move might serve as a wake-up call to businesses and consumers using Bitcoin, who hadn’t hitherto considered its carbon footprint.”
“Tesla’s decision certainly puts pressure on other big companies who accept Bitcoin to review their practices, because boardrooms will now be wary about getting it in the ear from ESG investors on the shareholder register.” [CNBC]
“We are of course very concerned about the level of carbon dioxide emissions generated from bitcoin mining. We hope that when Tesla’s bitcoin ventures are over, they will concentrate on measuring and disclosing to their market their full suite of environmental factors, and if they continue to buy or indeed start mining bitcoin, that they include the relevant energy consumption data in these disclosures.” [Reuters]
“It’s (bitcoin) not a sustainable investment and it’s hard to make it sustainable with the kind of system it is built on.”
“Overwhelmingly, I do think there will be a concerted effort by the bitcoin industry to be environmentally friendly. Tesla is one of the greenest companies on the planet so I’m sure they’ll figure it out.” [Reuters]
“It’s not so much bitcoin that is the problem. People are saying it’s energy intensive therefore it’s polluting, but that is just the nature of the energy we are using today. As bitcoin goes up there will be more incentive to make investments in renewable sources of energy.”
“I still think the big players will refrain from bitcoin for these particular reasons – one being very a negative climate angle to it, given the way it’s mined, and two, the compliance and ethical issues related to it.”
“Every miner’s objective is making a profit, so they don’t care about what kind of energy they use, if it is generated by hydro, wind, solar or burning coal.”
“Production of renewables is extremely volatile, it’s not ideal as a consistent form of power. The problem is that the miners that will last the longest will be the ones using cheap fossil fuels, simply because it is the cheapest and more stable source.”
“There are few companies that offer Bitcoin mining systems. If governments restrict the manufacturing or import of that equipment, they’ll rob the miners of the tools they use to suck up all that energy.
“If the (Bitcoin) price goes down, mining becomes less profitable and miners will stop.” [Mic]
“We know that Bitcoin is a big waste of energy. But we’re bound by law.” [The New Yorker]
Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?
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