Crypto is coining it again
Bitcoin is back. A single coin is now worth over $61,000 and the trend is expected to continue upwards for a while yet. It’s not that long ago that the price had plunged to a low of $16,600 from a high of $69,000 in 2021. With one analyst predicting the price could hit a peak of $88,000 there is much rejoicing to be had in Cryptocoinia.
For those who have suffered through the collapse, the recent resurgence in crypto coin prices is a cause for much celebration. This story in TechCentral explains some of the reasons for the rebound in crypto coin prices.
The article makes clear that cryptocurrency is big business, with the market value of the entire crypto market estimated to be $2.25 trillion, more than the gross domestic product of the EU’s third largest economy, Italy.
Speaking of matters European, it’s fair to say that the European Central Bank is not a fan, arguing that Bitcoin has no value. “Bitcoin transactions are still inconvenient, slow and expensive. Moreover, outside the darknet, the hidden part of the Internet used for criminal activities, the digital currency is hardly used for payments.”
But the rollercoaster swings in the value of cryptocurrency are not necessarily the biggest story when it comes to the likes of Bitcoin. Far more important to you and me and everyone we know is the environmental cost associated with it. Just as with any other form of mining for valuable minerals, there is a cost to mining for cryptocurrency. What the cost might be is not exactly clear as yet and, thanks to a recent judgement in the US, may be a little further away than it was last week.
In an effort to ascertain the level of energy used to mine for cryptocurrency, the US government had sought to survey cryptocurrency mining operations. As The Guardian reports, the US Department of Energy launched an “emergency” initiative last month to survey the energy use of mining operations.
The move came amid estimates that as much as 2.3% of the country’s total electricity demand last year came from 137 mining facilities. According to The Cambridge Bitcoin Electricity Consumption Index, global electricity use in cryptocurrency mining exceeded that of Egypt, Poland, Norway or Sweden.
According to the independent, non-partisan and no-profit RMI, “the climate effects of crypto, especially Bitcoin, are no secret. With an extremely large appetite for energy, crypto has the potential to serve as an impediment to climate progress”.
On 23 February, Texas-based US District Judge Alan D Albright granted a temporary stay against the plans for a survey, which had been requested by the Texas Blockchain Council.
In a joint article for CoinDesk before the judgement, Perianne Boring, founder and CEO of the Chamber of Digital Commerce, and Lee Bratcher, president of the Texas Blockchain Council, argued the action was “an abuse of authority in order to further the Biden administration’s public goal ‘to limit or eliminate’ US bitcoin miners, while pleading ignorance to US miner’s utilisation of renewable resources and uniquely flexible operations.”
While there may be merit in some of his argument, it’s worth noting that, like the claims surrounding the use of renewable energy sources by data centres in Ireland, it ignores the fact that both rapidly increasing energy users are essentially drawing renewable energy away from the wider populace. In other words, the bigger those industries become and the more energy they consume, the more they displace from everyone else. And that applies even more so when it comes to renewable energy, which is not only more environmentally friendly but also, in many cases, cheaper.
It’s also worth stressing that whatever percentage of their energy usage is fulfilled by renewable energy, cryptocurrency and data centres account for very large – and growing – shares of overall electricity consumption.
So while most of the attention recently has been focused on the price of Bitcoin, perhaps we might be better served looking at its cost.
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