Green bitcoin has been proposed as a way to counter the excessive energy consumption and CO2 emissions of cryptocurrencies. However, Martin C.W. Walker writes that the whole idea that you can create a green type of bitcoin that would work alongside non-green ones is hard to maintain. That would mean ignoring the way the cryptocurrency “mining” system works. He finds a potential solution in a joke white paper by an author purporting to be Natoshi Sakamoto’s wife: a single ordinary server to process the same volume of transactions as the entire bitcoin network.
“Celebrity investor” Kevin O’Leary, a former would-be prime minister of Canada, recently provided CNBC with a startling vision of the future of bitcoin, the world’s most valuable cryptocurrency. “I see, over the next year or two, two kinds of coin: blood coin from China, (and) clean coin mined sustainably in countries that use hydroelectricity, not coal.” Various cryptocurrency firms are already working to fulfil the desire for ‘green bitcoin as opposed to a “blood bitcoin.” Cryptocurrency miner Argo Blockchain plans to create the world’s first mining pool for the creation of bitcoin that is powered exclusively by renewal energy. It aims to do this by making use of the “abundant” solar and wind power in Texas.
Though bitcoin has been criticised for many things over the years, including facilitating crime and operating as a giant Ponzi scheme, the price has increased so fast recently that it is increasingly hard for the conventional financial sector to ignore it. However, the excessive energy consumption and CO2 emissions of bitcoin are a major concern for investment managers under increasing pressure to demonstrate they follow environmental, social and governance (ESG) principles. Rather alarmingly for investors, increasing bitcoin prices lead directly to increased pollution, even if the volume of transactions remains the same. Since the world entered a new cryptocurrency bubble in May 2020, the ballooning price of bitcoin has led to doubling of energy consumption by the bitcoin network.
Leading cryptocurrencies such as bitcoin, ethereum, litecoin and dogecoin use a form of transaction processing (normally referred to as “mining”) that involves an energy-hungry technique called “proof of work”, which incentivises greater energy consumption as prices rise. This has reached the point where each individual bitcoin transaction uses the same amount of electricity as 778,988 credit card transactions (with the same carbon footprint as processing 1,218,903 transactions). Argo Blockchain’s plans for green bitcoin could prove attractive to institutional investors, and their money is essential to keep the crypto bubble inflated, if not growing, since cryptocurrencies do not generate any real-world value and rely entirely on “new money” from investors to pay off old investors cashing out.
An alternative view on green bitcoin (if not green crypto…
Read more:How green is my bitcoin?