If you’re worried about the climate, forget about bitcoin

Spread the love

Bitcoin is going from record to record and even broke the $ 50,000 mark on Tuesday. It has gained 70% of its value since the start of the year. It is a paradox, when the climate is at the center of concerns. Because investing in bitcoin is the reverse of doing sustainable finance. It’s not because it’s digital that it’s clean, recalls Mark Dowding, investment manager for the management company BlueBay in a note published at the end of last week.

We can go on to say that, in the case of bitcoin, it is even completely the opposite. Bitcoin is an energy sinkhole. Why? Because to create this cryptocurrency, you have to mine it and to undermine it, you have to solve ever more complex equations that require ever more developed computer equipment and therefore ever more energy intensive. So much so that the Iranian authorities claimed earlier this year that bitcoin mining was causing power cuts in the country. Unverifiable, but not impossible.

Like norway

There are several indices of the electricity consumption of bitcoin, although it is impossible to calculate precisely. Take that ofUniversity of Cambridge. He estimates that the bitcoin system is currently using 124 TWh, which in itself doesn’t tell us much. But it allows for comparisons that are both simple and very meaningful. So, at this level, running bitcoin for a year requires more power than the UAE as a whole needs for the same time period, but slightly less than Norway needs. Note that this corresponds, roughly, to two and a half times the consumption of Switzerland.

The Cambridge Index is an estimate based on the idea that miners do not always use the most energy efficient equipment, but not the worst either. There are other measures. The Site Digiconomist, for example, publishes a more optimistic one on the current use of cryptocurrency, with a result a third lower than the Cambridge experts.

Popular coal

The problem is not so much the total volume as the means of achieving it. Bitcoin miners rarely live surrounded by wind turbines in their backyards, under a roof full of solar panels. Especially since they need a constant source of current to do their job, not to be subjected to the vagaries of the weather. The main source therefore remains coal, says Digiconomist, which is based on the location of mining facilities, often in regions that depend on this energy (China, Iran, etc.).

From there, they estimate the carbon impact of the currency. It is significant: a single bitcoin transaction has the same carbon footprint as 678,302 Visa card transactions. It is also the equivalent of the electricity consumption of an American household for 22.8 days. So much for those who relativize the ecological cost of bitcoin by stressing that other payment systems are not painless. It is true, but it is incomparable.

In this context, Elon Musk’s enthusiasm for bitcoin and the decision of the company he runs, Tesla, to invest $ 1.5 billion of his reserves in it is astonishing, not to say hypocritical. Added to this are the questions that are already being asked about the environmental compatibility of the car manufacturer’s batteries, for example.

Read also: Tesla and Elon Musk give bitcoin a boost

Difficult, no doubt, when we see the soaring bitcoin since January not to want to participate in the party. If we can believe that a currency that is based on nothing has such a value, we can probably also ignore its environmental consequences. But if we are concerned about the climate, then we will probably have to find other investments for our money.