A recent op-ed published in The Guardian has expressed some rather controversial opinions about the pioneering cryptocurrency Bitcoin, saying that it is “killing the planet” and that it is akin to oil. Are you wondering if you read that right? We wouldn’t be surprised if you are.
However, before dismissing journalist Ethan Lou’s ideas, let’s have a quick look at what he has to say. In comparing the price volatility of Bitcoin to that of oil, he writes:
“Oil is considered volatile in finance. In the two years after 2014, its price fell more than 70%, similar to Bitcoin’s crash in 2018. Layoffs swept both industries.While oil has tangible uses, most buying and selling is done on paper by traders seeking profit, with barrels never changing hands. Long ago, I learned cryptocurrency trading from oil professionals.”
Besides, drawing parallels between the volatility of oil and Bitcoin, Ethan Lou also accuses Bitcoin of ravaging the environment, just as dangerously as fuel consumption does. The allegations are not new: that mining uses a great deal of fuel, causes an immense degree of noise pollution, so on and so forth.
However, perhaps few have gone to the extent of even thinking that Bitcoin is “killing the planet”. He writes:
“Then there is the environment. Oil is a big offender. So is Bitcoin. Mining uses as much power as a small country, according to some estimates. Miners compete for limited coins, resulting in an arms race, and that power usage increases constantly and rapidly.”
However, it must be noted that Lou has since clarified that these views are not necessarily his own but what he apprehends to be worrying the environmentalists as they gear up to choose Bitcoin as their next big target.
How true are these allegations? With regard to price volatility, the two are quite different in their nature and no matter how volatile one or the other may be, it is impractical to make a comparison.
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With regard to Bitcoin ruining the environment, we must cite a recent Coinshares report that proved Bitcoin was not harming the global environment at all. The report noted that roughly 78% of Bitcoin miners make use of environmentally sustainable fuel in the form of sustainable energy, proving that Lou’s argument does not stand too steadily.
Specifically with regard to China’s fuel consumption for mining purposes, Lou writes:
“In China, which leads Bitcoin mining, 60% of energy comes from coal. Even if mining uses clean power, it carries the opportunity cost of not using said power for greener purposes, such as charging electric cars, which replace fossil-fuel-guzzling vehicles.”
To assure the journalist, one can cite the same Coinshares report, which notes that the Chinese government has initiated major steps to harness clean energy and the miners have increasingly begun to use energy that would have otherwise gone to waste.
Clearly, worries that Lou thinks are plaguing environmentalists are exaggerated at worst, and unfounded at best. Bitcoin isn’t killing our planet. Not just yet.
While the understanding we derived from the said op-ed was that Bitcoin was a serious threat to the environment, the author has reached out to us to provide us, and the readers with a greater clarity on the point he was trying to make.
When he says “Bitcoin’s environmental footprint will haunt it”, his main focus is not on the actual footprint Bitcoin generates.
Instead, he believes, that Bitcoin is similar to oil in the sense that it is likely to generate a great deal negative attention from the environmental movement owing to its growing prominence.
“Many other sectors do have big environmental footprints, but they do not make for great targets for the environmental movement. If oil fades, Bitcoin makes for an easy next target. All the Guardian column did was analyze the situation, without picking a side.”
While Lou has not picked a side himself, his questions pose an important question: will environmentalists bring out their big guns to fight the threat Bitcoin poses to the ecology? We don’t know yet, but if they do, we have the statistics to disarm them with.