Bitcoin: China's Crackdown Isn't Enough – Only A Global Effort Can Stop Crypto's Monstrous Energy Demand

Even universities and hospitals are affected by bitcoin’s second-order effects. According to the insurer, Hiscox, around 4,500 organisations fell victim to cyber attacks every day in the UK in 2018. Many of these involve ransomware payments, 98% of which are paid in bitcoin.

Some argue that to slow the increase in ransomware attacks, authorities need to crack down on cryptocurrency exchanges that enable bitcoin ransoms to be paid. Others claim that cryptocurrencies and ransomware are now so entwined that the only way to fight the latter is to ban cryptocurrencies altogether.

To clean up the crypto industry, a UN-backed Crypto Climate Accord and the Bitcoin Miners Council were established. These groups urge bitcoin miners in the US to only use leftover renewable energy. But it’s not possible to give a higher price to bitcoins produced using only renewables, because bitcoins are designed to be fully interchangable. Research shows that new miners joining the competition in North America have encouraged miners where there are no renewables to use more machines and work harder, increasing the network’s overall carbon footprint.

A global response

For regulatory purposes, bitcoin should be considered similar to the global trade in Chinese tiger parts. Banning tiger hunting in the UK is pointless, but banning the sale of tiger parts is useful. Likewise, when UK-based investors are allowed to speculate on bitcoin, they encourage an environmentally disastrous global industry that has so far failed to benefit anyone except criminals and some early speculators.

Cracking down on crypto exchanges or banning the import and use of mining equipment could be a relatively easy win for the UK as it prepares to host the 2021 UN climate summit. Doing nothing about the problem would negate the UK’s progress in other areas. Thanks to tax relief schemes and infrastructure investment, electric car registrations increased by 41% in 2020, preventing the release of around 50 million tonnes of CO₂ a year. Meanwhile, bitcoin mining causes nearly 60 million tonnes of CO₂ annually.

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Disclosure: This article is republished from The Conversation under a Creative Commons license.

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