Crypto mining is hurting our ability to combat climate change and its impacts. Meanwhile, investors, including those that market themselves as part of a green future, have ignored crypto’s growing carbon footprint. Unsurprisingly, the lack of government oversight has also let the crypto industry grow without any meaningful guidance. And now, as the crypto community’s upcoming Crypto Climate Accord evinces, the slow pace of government and its inattentive policymakers have led to serious climate costs that we are already paying for.
Bitcoin, which uses a “proof of work” mechanism, is a dirty business. According to the Cambridge Centre for Alternative Finance (CCAF), if Bitcoin were a country, its estimated electricity consumption would be comparable to the Netherlands, New Zealand, or Argentina. Unfortunately, all signs like the rising value of tokens indicate that Bitcoin will use even greater energy over the next few years. As the CCAF’s Michel Rauchs explained, “It is really by design that Bitcoin consumes that much electricity. This is not something that will change in the future unless the Bitcoin price is going to significantly go down.”
The crypto community, however, asserts that energy use is not necessarily bad. The community argues, for example, that sending and storing emails also uses tremendous energy. But the community’s counterargument misses the obvious point, that email communication has a value to society at large while crypto, as of now, does not.
Tellingly, crypto’s climate costs have not deterred investors who have rushed to capitalize on the pivot to ESG investments and finance green businesses. Recently, Tesla, which has built a brand on zero-emission cars, purchased Bitcoins for its corporate treasury. Venmo, the popular payment transfer app, will now allow its customers to buy cryptocurrencies on its platform. We should not expect corporate America, even those with a “green” ethos, to manage their addiction to speculative finance.
Just as we did not trust Exxon to regulate itself, we should not trust the crypto community. The Crypto Climate Accord, which describes itself as “inspired by the Paris Climate Agreement,” is a private sector-led initiative focused on decarbonizing the cryptocurrency industry. The accord aspires to enable all of the world’s crypto technologies with 100% renewables. In a world where we still must compete for renewable energy, governments, not the crypto community, should decide whether we want to prioritize renewables for powering cities or for mining more bitcoins.