The energy footprint of bitcoin is an important factor which makes this cryptocurrency very unattractive to institutional investors as said the chief investment officer of a financial services company in the U.S.
The Use Of Bitcoin Affects The Economy As Well As Environment
Fahad Kamal of a private bank in America said that they are very alarmed and others are also affected by the environmental aspects of bitcoin. Some investment associates also state that there are economic aspects which are impacted by the cryptocurrency. The energy used by bitcoin called staggering.
Some estimates of the U.K.’s University of Cambridge state that bitcoin uses more electricity every year than Ukraine and Argentina due to the energy intensive process of mining.
Since the increase in the price of bitcoin has increased in the recent months, a number of investors have raised some disturbing questions over the consumption of energy by bitcoin. Interestingly, most of them argued that bitcoin technology has increasingly been using renewable energy and will continue to do so more in future.
Bill Gates, the co-owner of Microsoft, told Andrew Sorkin in a live session for a Clubhouse last week that this currency uses much more electricity for every transaction than any method which is known to mankind.
Kamal said that the bitcoin’s energy clashes with environmental energies, social and investments of the governments which has become more important for the financial world. This energy is harmful for many aspects of the world not just economically.
If one thinks about the many trends which are prevalent in the market, right now, bitcoin is the one but ESG is a bigger issue. In recent weeks, this bitcoin energy issue has come to the fore. This started after the electric car company of Elon Musk, Tesla stated that it has bought up $1.5 billion of the cryptocurrency in January. This has created quite news.
But many are thinking how this Bitcoin mining is affecting electricity consumption? Bitcoin is mined for verifying transactions to the network of cryptocurrency and computers are hooked up for the same. The verification happens through solving puzzles. As a reward for puzzle solving verification, mines do receive, sometimes, a small amount of bitcoins.
Some miners have already hooked up the full warehouse of such computer systems for trying to get more bitcoins and thereby, using vast amounts of the electricity. Yet Matt Blom who is the head of the trading at the Nasdaq listed crypocurriences exchanging group, said about the fears of the bitcoin’s impact. He said that environmental impacts are too overblown because in future this mining could be done using renewable energy.
But this environmental impact cannot be reduced till we are using non renewable energy uses. We can plant more trees to reverse some of the environmental impacts.
As the time passes by, this is the way we hope the things are going to be as said by him. A report in September 2020 from the Cambridge University states that 39% of the proof of mining is mostly powered by renewable energy, basically hydroelectric. And this being said that 70% of such miners used renewable energy as a part of the energy mix.
Right now, this huge consumption of energy which is used to mine bitcoin and that electricity which is being produced in many dirty ways. This is a big factor for the world as said by Kamal. The fact being said that bitcoin is quite dirty which is a big issue relatively speaking.
However, Kamal has said that a private bank whose current valuation is $145 billion in a private banking network which doesn’t have a black and white view of the cryptocurrencies.