Originally published in Dynamics Business
Reconsidering The Environmental Impact Of Cryptocurrencies by Dr. Prash P, CEO Caleb and Brown
The speculative market’s obsession with the dollar value of Bitcoin and its Cryptocurrency cousins has acted as an unfortunately effective smokescreen; One that has obscured the fact that beyond being just an emerging asset class, Cryptocurrencies are, at their core, an emerging technology.
And as with any emerging technology that finds value propositions beyond its most obvious initial purpose, so too does it pose potential issues of concern not readily solved in the present paradigm. One of the more glaring of the latter is that of the energy demands of the technology.
That the technology underlying Cryptocurrencies has a tremendous energy appetite is undeniable. Cryptocurrency mining ( the process underpinning numerous blockchains ) requires enormous computational power and electricity. According to Diginomist’s Bitcoin Energy Consumption Index, Bitcoin itself has an estimated annual electricity consumption of over 73TWh, roughly the energy consumption of Austria. While these numbers may sound alarming, it is worth noting that as the price, market capital and adoption of the industry increase and Cryptocurrency mining becomes more profitable and appealing, this figure looks set to rise.
So what does this mean for an industry that has built itself on Libertarian principles but looks to flout the environmentalist persuasions of the liberal Left?
The pessimist’s view would be, as it appears on face value, that this industry is non-sustainable; that these energy demands make for an industry that goes against the view of the future that most progressive thinkers and policymakers aspire towards. Surely, advocating for a technology that looks to drive a positive feedback loop of energy usage driving adoption which incentivises for greater energy use is incompatible with the Futurist’s aim for a greater balance in humanity’s consumption demands.
Conversely and perhaps controversially, I offer an optimistic alternative viewpoint.
The Renewable Electricity Futures Study, perhaps the most comprehensive study into renewable energy projections in the United States, has revealed that the U.S. has the capacity to generate 80% of its electricity from renewable energy sources by 2050. This is not to suggest that it is on track to, for it most certainly isn’t if current energy policies were to hold; Rather that we possess both the technological, intellectual and functional capacity to achieve this if the policy were to align and enable this.
Without treading into the murky waters of conspiracy theory, questions as to why this misalignment exist often point towards the lack of incentives towards this new direction. More pertinently, they point towards the financial incentives inherent in maintaining the status quo and the influence of this on policy.
So if the technology, know-how, and capacity to drive a renewable energy future are waiting in the wings, could Cryptocurrencies and the significant economic benefit that awaits anyone who manages to create a sustainable pipeline that drives this forward, be the incentivising factor necessary to power this change?
Could a Bitcoin be the metaphorical pot of gold at the end of the sustainable energy rainbow?
The reality will, naturally, sit somewhere between these two viewpoints, each on polar ends of the dispositional spectrum.
Regardless, as we look past the dollar value of this market, this will likely emerge as a discussion of considerable significance in the future of this industry.
As the smoke clears.
Dr. Prash is the CEO at Caleb and Brown is available to guide new and seasoned investors.
About Dr. Prash P:
Prash is considered a thought leader in the philosophical and existential implications of this emerging technology and is a regular speaker at industry conferences.
Call Dr. Prash on +61 1800 849 149 or Contact Us to discuss further.
Image source: Mashable