It’s hot news of these days the steep rise and fall of Bitcoin. When in Feb 2021 Elon Musk (Tesla and SpaceX founder) announced that Tesla cars could be purchased by paying in Bitcoins, the cryptocurrency value sky rocketed. A few weeks ago, though, he counter-announced that he had decided to dismiss payments in Bitcoins and the virtual currency value immediately after crashed losing more than 20% of its value in a few hours, causing serious financial losses worldwide.
By the way, the UK’s Advertising Standards Authority (ASA) recently said the the Luno app adverts that appeared in the London Tube with the slogan: “If you’re seeing Bitcoin on the Underground, it’s time to buy” should have been amended as it underplayed the risks of investing in volatile and largely unregulated digital assets like Bitcoin.
But the point I’d like to make here is the reason why Musk changed his mind and it is reported in a Financial Times article published on 20th May 2021 (Bitcoin’s growing energy problem: ‘It’s a dirty currency’). He said: “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”.
The article continues with reporting the following sentence: “Bitcoin alone consumes as much electricity as a medium-sized European country,” said Professor Brian Lucey at Trinity College Dublin. “This is a stunning amount of electricity. It’s a dirty business. It’s a dirty currency”.
The latest calculation from the Cambridge university’s Bitcoin Electricity Consumption Index suggests that bitcoin mining consumes 133.68 terawatt hours a year of electricity.
That is an interesting point that goes along with what emerged last year during the world in lockdown. All of us were at home virtually 24/7, therefore we used the Internet much more than before (attending virtual classroom lessons, webinars and online conferences, virtual gym lessons, playing films on streaming providers, etc.) and the overall energy consumption remarkably increased compared with the usage of previous years.
This is something we should think of when we identify (and try to solve) the causes of Climate Change. It is certain that it has an anthropic cause, but this is not only related to transport and household heating emissions. We should take into account also all the energy used to make the Internet work at the fastest speed possible as we like enjoying in these days. Some years ago Google was so much blamed for consuming a lot of energy for its searches that the company needed to unveil plans for using renewable energy sources to supply power to their mainframes.
Since a few years air carriers ask us if we would like to pay a few additional Pounds/Euros to compensate the CO2 produced to carry us from A to B. I wouldn’t be surprised whether one day in our phone bills we would see an additional cost aimed to offset the emissions produced by watching our favourite series on Netflix, Amazon Prime Video or listening to music on any other streaming service.
Stefano Mainero
EPN Consulting Founder & CEO
P.S.
Ether, the cryptocurrency native to the ethereum blockchain network, has been working on a shift to this model for more than two years, but the project is dogged by technical difficulties. Musk has also dangled the possibility that he could back other coins with a lighter energy impact
(source: the Financial Times article mentioned above).
The full MAY 2021 EPN Consulting Newsletter is available here.