Bitcoin and other cryptocurrencies have bothered me for a long time. The environmental impact of all the electricity they use is huge. Half of the electricity generated in 2021 came from fossil fuels. So Bitcoin in particular is literally destroying the planet for money.
From July 2021 to July 2022, Bitcoin mining consumed 36 billion kilowatt-hours of electricity in the United States. That's the same amount as Maine, Vermont, New Hampshire, and Rhode Island combined. As more miners participate in blockchain calculations, power usage increases exponentially. Bitcoin is currently being used far more than its annual estimate.
This is just the use of electricity for one cryptocurrency.
Bitcoin's method is called proof of work. This involves solving computational puzzles to extend the blockchain. Making money is becoming more difficult day by day. Therefore, they use more and more electricity.
There are other currencies that use proof of stake. Although proof-of-stake uses less power than proof-of-work, it still consumes a significant amount of power. In PoS, the more cryptocurrencies a user holds and the more actively they “stake” for the security of the network, the more likely they are to be chosen to verify transactions. I don't pretend to actually understand this. I understand proof of work.
My concern here again is electricity use and what it does to all of us. That can drive up your electricity bill. The question is regarding very intensive proof of work, is there a point where the electricity bill is so high that the reward is less than the electricity bill?
I don't know the answer. But given the direction Trump seems to be taking with all the money donated to his campaign from crypto exchanges, and how the value of cryptocurrencies has risen since Trump's election, I becomes worried. He has just appointed Paul Atkins to chair the Security Exchange Committee. He just happens to be a supporter of cryptocurrencies.
Conversely, current Securities and Exchange Commission Chairman Gary Gensler is leading the crackdown on the cryptocurrency industry.
People quickly forget about Sam Bankman Freed. His FTX cryptocurrency exchange has extorted incredible amounts of money from investors and crypto holders. He was jailed for 15 years and ordered to collect $11 billion in fines. Behind the committee's crackdown are cases like his. President Trump is promoting cryptocurrencies and blocking regulation, but he is going in the wrong direction.
I consider cryptocurrencies to be a pyramid scheme. Those at the top earn money, but those at the bottom lose money.
Cryptocurrency super PACs have poured $131 million into this year's elections. They want a return on their investment. That's another concern. A tracker run by a company called Stand With Crypto counted 274 pro-crypto candidates elected to the House of Representatives and 20 to the Senate. Cryptocurrency has been taken over without a fight.
The Trump administration's controls on cryptocurrencies will likely allow for an IPO or initial public offering. Some investors will be large and some will be small. Just like a bank, at some point it gets too big to fail. Do you want the government to bail out failed cryptocurrencies?
In June 2021, the People's Bank of China banned all virtual currency transactions. There were several reasons behind this, one of which was that the Chinese yuan was considered unstable. The other was its illegal use by criminals, especially in drug trafficking, in the United States and around the world alike. However, owning cryptocurrencies is not prohibited. Oddly enough, China is the second largest government holder with 190,000 Bitcoins.
In 2014, China began working on a digital renminbi backed by China's banking system. Digital Yuan manages users and transactions. It is intended as a substitute for cash. Therefore, no interest is charged and it is used on a one-to-one basis with the renminbi. Unlike with Bitcoin, users have no privacy. The Chinese government knows the value of each digital wallet. If the U.S. government were involved in digital currencies, you wouldn't believe the cries of government overreach.
According to blockchain analysis firm Chainalysis, the value of illegal cryptocurrency transactions reached $14 billion in 2021, of which the United States accounted for 25%.
What U.S. crypto companies and exchanges are counting on is a lack of regulation that will leave the industry in the wild. What do you think will happen if the financial system is unregulated?
The global electricity consumption for Bitcoin mining in 2020-2021 was 173.42 TWh. More than the electricity consumption of most countries. The mine emitted 85.29 million tons of carbon dioxide into the atmosphere. This is the equivalent of burning 84 million tons of coal or operating 190 natural gas-fired power plants. To offset this, 3.9 billion trees would need to be planted, an area the size of Switzerland, the Netherlands and Denmark. That happens every year.
The water used is equivalent to 300 million people living in sub-Saharan Africa. The land area used was 722 square miles, which is 1.4 times the size of Los Angeles.
The only way cryptocurrencies can reduce their environmental impact is by implementing more environmentally friendly blockchain verification protocols. But I think it's already too late. Greed is a very powerful force, and just as cryptocurrencies are rapidly consuming electricity, Trump and his co-conspirators are rapidly becoming greedy.
Currency mining is predicted to cause global warming to exceed the goal of limiting global warming to 2°C in 30 years. This does not take into account the rapid expansion of cryptocurrencies and other carbon sources. I think it's been 10 years or less.
Electricity used in 2020-2021 increased by 60% compared to 2018-2019. I can't find the current numbers, but I can see where this huge increase in consumption is going. It does not mention that China is building two coal-fired power plants every week.
Next is water usage. As explained in “Global Water Wars”, fresh water is decreasing year by year. Miners use water to cool computer servers directly and indirectly by power plants, but the evaporated cooling water is never seen again.
Another problem is the e-waste generated as systems wear out and are replaced by faster systems. There is no estimate of how much land would be needed for this disposal. There is also pollution from disposal sites.
No estimates were found for increases in water usage or land dedicated to crypto server farms. What they already use is bad enough.
People have been trying to figure out what the break-even point is for Bitcoin. You have to account for all the factors I mentioned: electricity, equipment, water, land, pollution. They can change daily. The best experts have come up with the above graph for electricity bills only.
Am I against cryptocurrencies? Yes. Please resolve all issues. If you do so, your objections will be withdrawn. Cryptocurrency mining uses all kinds of resources and the need for it is growing, so we don't know how to reduce the negative impact.
Cryptocurrency is the new gold rush, so Trump and his cronies who paid to buy it don't care about the environment or the future. They want money and they want it now.
I didn't have to wait long for Trump to prove my point.
