Cryptocurrency makes the climate crisis worse | TheHill – The Hill

Cryptocurrency, and Bitcoin in particular, is always in the news nowadays and is becoming a significant factor in modern financial markets. Unsurprisingly, the subject of regulating cryptocurrency in one form or another has become an important concern. China is alreadyrestrictingits use. Central banks around the world are looking at decentralized cryptocurrencies to assess their potential impact on financial stability, or to even issue their own digital currencies. Securities and Exchange Commission Chair Gary GenslerGary GenslerCryptocurrency makes the climate crisis worse SEC ups disclosure requirements for Chinese companies seeking US IPOs: report Crypto industry seeks to build momentum after losing Senate fight MORE described crypto trading as theWild Westrecently calling for Congress to create a protection regime for crypto investors. A major impasse for the critical infrastructure bill was the issue of taxing crypto transactions. Others have proposed that stablecoins beregulated like banks.

Unsurprisingly, the crypto industry has developed a formidable lobbying force to ward off further regulation. Regulation is totally antithetical to the very idea of decentralized cryptocurrency.

Yet, little focus has gone to the environmental dangers of cryptocurrency. Yes, Elon MuskElon Reeve MuskHillicon Valley: Tech groups pledge action on cybersecurity Cryptocurrency makes the climate crisis worse The Hill's Morning Report - Presented by Facebook - Biden continues to grapple with Afghanistan chaos MORE attracted the usual hype when he first announced that Tesla would accept Bitcoin and then stated (rather belatedly given thescience) that since he learned of the environmental damage inflicted by cryptocurrencies he would reverse that decision.

Cryptocurrencys impact on the environment is indeed very serious possibly the single most important policy factor against its growth.

Cryptocurrencies, Bitcoin and Ethereum in particular, are so damaging to the environment that they threaten to reverse any gains achieved through the transition to electric vehicles and the reduction in fossil fuels use. Much of this consumption and output derives from the energy and processing intensive mining of Bitcoin and proofs of work. Even now the total Bitcoin carbon footprint exceeds the total emission reductions of electric vehicles. According to the Cambridge Bitcoin Electricity ConsumptionIndex, Bitcoin already consumesmore energythan the whole of Argentina (pop. 45 million).

Digiconomists Bitcoin Energy Consumption Indexestimates that Bitcoin and Ethereum together consume the same amount of power as Ukraine and Israel, totaling 52 million people. The carbon footprint of asingleBitcoin transactions equates to nearly 2millionVisa transactions, or 135,229 hours of watching YouTube! A single Ethereum transaction consumes the equivalent power used by an average U.S. household over 4.55 days. Furthermore, the energy and carbon footprints of both these and other cryptocurrencies are projected to grow exponentially in volume as speculation, hype and criminality continue to drive volume. Already, total crypto energy consumption is roughly comparable to the carbon emissions produced by the metropolitan area ofLondon, according to The Gaurdian.

Apart from these staggering energy consumption statistics, crypto is alsointensifying competition for chips, for which there is already a global shortage impeding the manufacture of alternative energy devices, including EVs. Crypto has already grown exponentially. Further growth will only broaden its carbon footprint.

Given thedaunting targetsfor carbon reduction that we face in the U.S. and globally, this development should concern everyone. If there were offsetting gains with crypto, one might justify it on a cost-benefit basis, as we do with EVs (which inflict some damage but less overall than combustion engines). Yet, there are no real gains.

There are many classes of crypto adventurers: libertarian idealists who dream of freedom from sovereign monetary control; hardware and software players mining the stuff for reward; traders who derive revenue from crypto transactions; speculators who ride the wild volatility of crypto; crypto wallet raiders; and criminals who exploit the relative degree of anonymity crypto offers as ransomware. Despite grand statements about reducing transaction costs and liberation from fiat money, none of the legitimate players have made a case for crypto contributions to general welfare. Beyond rhetoric they have not even seriously attempted to. Instead, they have relied on the naivete of lawmakers, regulators and journalists.

Well-informed commentators have described crypto as agiant bubble. Yet, regulators continue to display timidity in addressing the subject. While the Biden administration urges the auto industry to transition to 50 percent EVs by 2030, we recklessly allow crypto to escalate at huge current and potential cost to our carbon footprint.

China has at least taken one step in the direction of connecting crypto to climate change concerns: It hasbannedcrypto mining. This activity will only move elsewhere. Legislators and policymakers should inform themselves now and act soon to stop the counterproductive growth of this industry, no matter how potent their lobbying forces have become. If they do not, even as the threat posed by global warming enters code red according to the Intergovernmental Panel on Climate Change we will find ourselves in yet another situation where an entrenched industry prevents us from advancing the common good and tackling climate change.

LawrenceG.Baxteris the David T. Zhang professor of the practice of law at Duke University where he also directs the Global Financial Markets Center.

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Cryptocurrency makes the climate crisis worse | TheHill - The Hill