The Environmental Implications and Impact of Bitcoin Deemed Not Worth the Enthusiasm

bitcoin environmental benefit

Since its inception, the famous cryptocurrency has come under fire for a number of reasons. Some reasons were expected, seeing as a revolutionary and transformational concept is bound to attract opposition from the parties it threatens to bankrupt. Some opposition came from interested parties who could not involve themselves in the accumulation of the cryptocurrency due to either financial restrictions or technical ones.

However, the most recent wave of opposition comes from environmentalists, who believe that the cost to the environment that is attained through the proliferation of the currency is too great for anyone to be a proponent of it.

A Rising Star in the World of Finance

Bitcoin started off as a novel concept, and was mostly used for underground transactions between individuals who did not wish to be noted by the authorities and/or their governments. The ability to fly completely under the radar was, and still is, the greatest quality of the cryptocurrency.

Even despite the fact that several countries now have very harsh sanctions on it, and some regulate it vigorously, it rises in value at an almost startling and admittedly delightful rate (for those who possess even a single Bitcoin!).

The most recent rise in price has put the world in fervor, as the value climbed to cross $7,600. A number of experts claim this to be living proof that their predictions regarding the rise of the cryptocurrency were true, and that Bitcoin is not far from becoming an asset class that is as coveted by many in the very near future.

CME’s Decision to Initiate Bitcoin Futures in the Final Leg of 2017

Cme Group, which is arguably one of the biggest derivatives exchanges, passed the decision to launch a number of Bitcoin futures in the last quarter of this year. Now, while these are positive tidings to the holders of the cryptocurrency, there is some irony here.

As Bitcoin spikes in price, it will well and truly become an asset class of its own. Since the cost of Bitcoin keeps rising on a daily basis almost, the day is not far when it defies all price standards, and becomes far too expensive as well as extensive to maintain. And this is where the environmental issues come in, seeing as it requires more computing power to mine Bitcoin today than it did even a month back.

The Energy Demands of Bitcoin

More computing power translates to greater energy needs, and greater energy needs lead to more environmental damage, at last if we stick to the old-fashioned fossil fuels. Unlike countries which have started to operate some of their sectors of both public and government on alternative fuels, the larger countries, such as the United States, where the majority of miners are based in, still continue to function on fossil fuels.

Awareness Among Investors

This situation is not lost on the investors, who are now seeing the implications of their potential investment on the global energy situation, as well as the ramifications of the growing energy demand on the environment.

According to Remy Briand of Morgan Stanley Capital International (MSCI), “We could end up in a situation within a few years where the electricity consumption of bitcoin mining would be equivalent to a country like the Netherlands or Switzerland.”

This statement is not too far from the truth, since Bitcoin is already consuming energy at a scale that is equivalent to the whole of Nigeria. Yes, the cryptocurrency is maintained using the same amount of power that Nigerians have access to!

These are serious numbers, and in the future, when Bitcoin is sure to rise to even greater heights, and as investors scramble to buy now and reap rewards later, it may not be foolhardy to state that Bitcoin has the energy needs comparable to that of a First World country such as the UK or even France.

Holders Not Willing to Let Go

While many a holder understands how the currency may be damaging the environment, a lot of them are not willing to cash it out just yet. This is due to the projections of value spikes in the near future, and the prospect of further investment, and partly due to the advancements in technology which allow for swifter and more effective mining.

In this day and age though, according to some experts, it may be unwise to hold on to Bitcoin stocks, especially if you are a minor holder. Following are some of the reasons why Bitcoin is projected to become less viable progressively, according to the aforementioned experts:

  • Bitcoin transactions cost considerably more now than they have ever done.
  • The amount charged per transaction may be subject to increase depending on the available capacity of the network in which the transaction is being made.
  • Day-to-day transactions are bound to be hampered due to network capacity restrictions, even as more businesses make Bitcoin an acceptable mode of transaction.
  • Transactions as well as mining now require more energy, and the network is, as a whole, more expensive to operate. Each transaction now costs more than one made via credit card, both in terms of finances as well as energy spent.
  • As new companies set up operations centered on Bitcoin mining and transactions, the energy requirements of the local areas continue to grow, and centers for power and energy are likely to come under stress. In addition to that, the increased demand for power is likely to be resolved using drastic measures, such as sudden spikes in fossil fuel consumption.

An increase in regulations on a day to day basis also lightens the appeal of Bitcoin, making it less than viable for the new investor in a country that already regulates the cryptocurrency harshly. This coupled with the damage to the environment that occurs as more and more computing power is required, makes Bitcoin a lucrative yet somewhat questionable asset to possess. Nevertheless, the value of Bitcoin is still projected to continue on its path upwards.

 

 

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