What are the environmental concerns around Bitcoin?
|The recent sharp falls in Bitcoin have happened as Tesla’s CEO Elon Musk highlighted his environmental concern about Bitcoin. So here is what all the fuss is about.
Bitcoin mining is very ‘dirty. The amount of electricity consumed to mine bitcoin is about the same as a medium-sized country taking more electricity than Sweden, Ukraine, & Norway. Here is the FT chart showing that based on research from Cambridge University’s Bitcoin Electricity Consumption Index:
The estimate on electric use is an estimate that could be wrong. An upper-end estimate eclipses the 133 terawatt estimate and looks for a figure closer to 500 terawatts. This would mean that Bitcoin could in fact be using more electricity than the UK.
About 65% of Bitcoin mining is thought to come from China where around 60% of the energy mix comes from coal.
The basic argument about Bitcoin’s energy consumption has meant Greenpeace has now scrapped their facility accepting Bitcoin’s which they started in 2014. Greenpeace state that their policy was no longer ‘tenable’ as ‘the amount of energy needed to run Bitcoin became clearer’.
This is now a political agenda
Nigel Topping who was appointed by the UK Gov’t to coordinate with businesses over climate goals in light of the COP26 talks says Bitcoin is not on the agenda but it is becoming one of the ‘climate baddies’.
So, this is the heart of the issue.
Bitcoin advocates say that renewable energy sources will come in time and that Bitcoin mining could even accelerate this process.
The takeaway
Any other high-profile company or Gov’t that rejects Bitcoin on its environmental impact will cause further selling. It is one headline to watch out for.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.