ESG Is Just Another Excuse To Ban Bitcoin

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This week has seen digital asset investors breathe a side relief on two big fronts: regulation from the US, and a potential banning of bitcoin in the EU due to its supposedly unfavourable environmental credentials - which was sensibly thrown out.

The EU review of proof of work mining posed a threat to large swathes of the crypto world, as both its two flagship coins are still using proof of work systems. In its review of this system of crypto mining, the EU is working under the guise of environmental concerns, however this seems like another attempt to ban cryptocurrency, which continues to pose a huge threat to the established financial system. 

There has been little work undertaken to truly understand the actual environmental impact of mining cryptocurrencies, not least compared to the oil and gas industry that the EU and other global governments are still very happy to support through kickbacks and incentives. If regulators were seriously concerned about the environmental impact of industries, then cryptocurrency would surely be the last industry to be considered. 

While it’s important for all of us to consider what we do about climate change, the current singling out of cryptocurrency in this debate seems somewhat lopsided, if not suspicious. 

The EU highlighted proof of stake as a potential answer to the issue of mining, and indeed the Ethereum Blockchain is already well on the way to creating a vast proof of state network. We are not there yet, however, and bitcoin is unlikely to be able to make this transition. As the grandfather of cryptocurrency, its systems are more or less set in stone. So any move to ban proof of work is effectively a move to ban bitcoin, and we should all be sceptical when government bodies attempt that. 

Some other thoughts...

Should crypto exchanges ban Russian customers?

• A lack of action from crypto exchanges on banning Russian customers shows both unpreparedness on issues that typically don’t touch the industry and a conflict with the Raison d’etre of crypto
• It begs the question: what is moral in crypto?
• In a space that is meant to be free of the constraints of traditional finance to service the unbanked, is it moral to restrict access to millions of people that have little say in the armed conflict happening around them?
• This could be a real litmus test for how much crypto wants or can stay separate from the rest of the world.