- After Elon Musk’s statement that Tesla will not accept Bitcoin as payment for its vehicles, citing environmental concerns, Bitcoin’s power consumption is now a hot topic.
- Bitcoin utilizes 0.6% of the world’s energy, using more than Argentina.
- Despite the announcement by Elon Musk, Bitcoin has some compelling arguments as to why it is not bad for the environment.
- The price of Bitcoin tumbled to lows of $46,000 following the Tesla statement.
Over the years, there have been whispers about the environmental impacts of Bitcoin. That was because Bitcoin was a fringe asset, far away from mainstream conversations. As its value soared, millions of users thronged into the crypto space, and the impact of Bitcoin on the environment has become a focal point for Bitcoin users and critics.
The conversation reached its boiling point following the recent declaration by Elon Musk that Tesla will no longer accept Bitcoins as payments for its automobiles because of the over-reliance of fossil fuels in the mining of Bitcoin. Here’s why we think that crypto is not bad for the environment.
Crypto Is Not Bad For the Environment
The mining of most cryptocurrencies involves the usage of electricity. Bitcoin has garnered a reputation for being one of the cryptocurrencies utilizing large amounts of electricity. However, this is not a bad thing if the energy used in the mining of cryptocurrencies comes from renewable sources.
The mining of Bitcoin encourages the creation and use of renewable forms of energy. To maximize hashes, miners are encouraged to use cheap, renewable energy sources like solar and hydroelectric energy. Therefore, if the popularity of Bitcoin continues on an upward trajectory, it will lead to an increase in the use of renewable energy around the world. Analysts believe that as the technology improves, there will be a massive transition toward the use of renewable energy.
Secondly, Bitcoin consumes way less electricity than the current traditional financial systems. The sheer number of workers and computers, the printing of money, transportation of currencies, and the massive amount of time spent preventing fraud and counterfeiting lead to a higher carbon footprint than Bitcoin. According to a report by ARK Investment Management, Bitcoin mining does not utilize up to 10% of the energy required by the traditional banking system.
Another argument in favor of cryptocurrencies is that Bitcoin uses only 0.6% of the world’s electricity, spread across countries with varying energy prices. That compares favorably to the video game industry, which uses incredible amounts of energy.
On the Flipside
- Elon Musk has tanked the entire cryptocurrency market after making a U-turn with his decision to stop accepting Bitcoin as payment.
- His statements led to the overall cryptocurrency market capitalization falling by up to 10% in under 24 hours.
- Most of the brunt was born by Bitcoin; the leading crypto plunged to as low as $46,000.
How To Improve Bitcoin’s Environmental Impact
While Bitcoin mining still has some form of impact on the environment, it will be in the best interests of the entire cryptocurrency sector to improve this. One way of doing this is through legislation to encourage the adoption of renewable forms of energy and the abolishment of fossil fuels.
Furthermore, multiple forms of renewable energy should be used because there is no single ideal form of green energy. Despite the cost-effective nature of wind energy, it is highly unfavorable to wildlife. Whole photovoltaic cells emit pollution, which harms the environment in different ways. The perfect solution is a healthy mix of several forms of renewable sources of energy.