1 Nov 2021

COP26 - Proposition #1 - Ban all crytocurrencies

I've been very quiet for several months. But with the COP26 starting this morning, and the prospects for real progress looking very bleak, I am spurred into action. I am very pessimistic about the chances of getting political leaders to make the right decisions on a country by country basis. Politicians are often only worried about getting re-elected in the short term - and making decisions that require their voters to accept constraints tends to be unpopular.  I believe that we need to make decisions at the global scale. For this, the best thing would be for world leaders to accept the need to create a global authority with responsibility for saving our planet from disaster - and with the teeth needed to make the necessary changes. This will not be easy - especially in a world where Trumpist slogans like "America first" are rife. But, it is our only hope. 

What sort of actions could this newly created authority take? Well here's one. Ban all crytocurrencies - with BitCoin at the top of the list. 

The CoinMarketCap website gives an up-to-date list of all traded cryptocurrencies - there are currently 13,390. When I looked at the question in 2015 - there were only 740 of them. How things have changed!

Today, the site shows that the Market Capitalization of those cryptocurrencies has now reached a staggering $2.6 trillion ($2,652,238,051,844 to be precise) - up from a mere $5 billion in  November 2015,  and up 1000% since the start of 2020. Trading in 24h totaled $155 billion last Friday. 

Bitcoin alone has a market capitalization of over $1.17 trillion, with the second runner - Etherium - coming in at over $510 billion. 

But my problem with Cryptocurrencies is not their monetary value. It's the fact that their usage is destroying the planet by using unbelievable amounts of energy and resources. 

According to the Cambridge Bitcoin Electricity Consumption Index Bitcoin mining is currently using an estimated 13 Gigawatts of power, which on an annual basis means an estimated 113.93 TeraWatt hours (TWh) of energy. 

Another site gives the annual figure at 184.59 TWh, comparable to the power consumption of a country like Thailand. It's the equivalent of 87.68 Million tons of CO2, the equivalent of the carbon footprint of Chile. 

But even more mind-blowing are the figures for the energetic costs of a single Bitcoin Transaction - 872 Kg of CO2 and over 1800 kWh of energy. Think about this before you ever decide to buy something with Bitcoin.

In addition to wasting vast amounts of energy, Bitcoin mining also requires the use of huge numbers of very expensive GPU server farms - as anyone trying to get hold of GPU knows. There was already a shortage of chips because of COVID - but this has only been made worse by the fact that vast amounts of computing hardware is being bought up for cryptocurrency mining. The reason is simple - you can make money that way. Sod the planet - if I can make money wasting massive amounts of resources, then so be it. 

Some may argue that people use cryptocurrencies like Bitcoin to avoid having to use the commercial banking system, with its 2-4% merchant fees and international transaction taxes on card-based payments. I have some sympathy for this. But the simple fact is that the people use Bitcoin (and the thousands of other cryptocurrencies) for one of two reasons - to make money by speculation, or to hide transactions that could well be related to illegal activities like drug trafficking

So, if the world leaders meeting in Glasgow wanted to do just one thing that would really have an impact, I would say that a global ban on all cryptocurrencies should be close to the top of the list. Of course, there will be a lot of resistance - particular from the people that currently have a lot of bitcoins. But we will all need to make sacrifices if we are to have a hope of having a planet compatible with human life in the coming decades. Reducing the wealth of some of the people that have made fortunes from speculation is fine with me. 

As I said, I have some sympathy with those who seek an alternative to the current system, where the vast majority of the money we use is produced as interest-bearing debt by commercial banks. But that alternative doesn't have to be cryptocurrencies like Bitcoin.  See my next post for some suggestions for a real alternative.



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