The mining of crypto is affecting our ability to fight climate change and its effects. Meanwhile, investors, including those self-marketing themselves as part of a green future, have ignored crypto’s growing carbon footprint. Unsurprisingly, the lack of government oversight has allowed the crypto industry to grow even without meaningful guidance. And now, as the upcoming Crypto Climate Accord shows the crypto community, the slow pace of government and its inattentive policymakers have resulted in serious climate costs that we are already paying for.
Bitcoin using a “proof of work” mechanism is a dirty business. According to the Cambridge Center for Alternative Finance (CCAF), Bitcoin would be a country whose estimated electricity consumption would be comparable to that of the Netherlands, New Zealand or Argentina. Unfortunately, all the signs like the rising value of tokens suggest that Bitcoin will use even more energy in the next few years. Michel Rauchs from the CCAF explained: “Bitcoin actually uses so much electricity. This won’t change in the future unless the price of Bitcoin drops significantly. “
However, the crypto community claims that energy usage isn’t necessarily bad. For example, the community argues that sending and storing email also uses tremendous energy. However, the community’s counter-argument overlooks the obvious point that email communication has value to society as a whole, while crypto currently does not.
Significantly, the climate cost of crypto hasn’t stopped investors from leveraging the linchpin for ESG investing and funding green businesses. Recently, Tesla, which has built a zero-emission car brand, bought bitcoins for its corporate coffers. With Venmo, the popular payment transfer app, customers can now buy cryptocurrencies on their platform. We shouldn’t expect American corporations, even those with a “green” ethos, to get a grip on their addiction to speculative finance.
Just as we didn’t trust Exxon to regulate itself, we shouldn’t trust the crypto community. The Crypto Climate Accord, which describes itself as “inspired by the Paris Climate Agreement,” is a private sector initiative to decarbonise the cryptocurrency industry. The agreement aims to enable all crypto technologies in the world with 100% renewable energies. In a world where we still have to compete for renewable energy, governments, not the crypto community, should decide whether we want to prioritize renewable energy for powering cities or for mining more bitcoins.