It is nothing new to be able to testify to the relevance that cryptocurrencies are acquiring (yes, so much so that we can affirm that they are in their best moments, with no negative projections even in the short term, and driven mainly by the failure and deception of the fractional reserve).
Bitcoin is the most popular of them all (apart from being one of the most interesting, without denying that there are cryptocurrencies that have improved what became one of the first applications of blockchain), although it cannot be denied that the market of decentralized cryptos (in essence) is very diverse.
Also, as is well known, there is much controversy (rather, lack of consensus) about whether this currency is useful and convenient. And not necessarily and exclusively thanks to skeptics of certain developments in technology that may have an impact on further digitization.
We are talking about criticisms coming from those who are worried about seeing a challenge to the iron economic interventionism being practiced, complicating the idea of a much more “optimal” control of financial transactions (they already know that, being for them, we will lose those of us who exercise freedom of saving and investment).
But it is that these criticisms, occasionally presented with excessive warnings about computer crimes (cybersecurity issues) or “tax fraud” (the perfect alarm signal to curtail economic freedoms) have a new additive that, under a certain perspective, could result in a sensationalist campaign.
For the sake of caution, I cannot say whether this is an organized campaign. Although I am certain that many of the supporters of this warning thesis are the same people who fear these assets because they favor economic freedom. I can only say that perhaps a “revolutionary ideology” has entered full force.
Specifically, it is worth asking ourselves, as a result of this, if in truth, boosting cryptocurrencies means intensifying the environmental carbon footprint and if we should therefore turn back on this technological advance, so “revolutionary” (in the good sense of the word) for the present and future of cryptocurrencies.
Some say bitcoing mining power consumption equals that of Argentina in general
According to a recent report published by the University of Cambridge, the carbon footprint produced by the electricity consumption of cryptocurrency mining would be equivalent to the annual power consumption of countries such as Argentina (with a population density of 9 inhab / km² and 2,030 kg of oil equivalent per capita).
This study, which fixes a correlation between the attractiveness of mining (by demand) and the boom in the value of the crypto unit such as Bitcoin, points out that the energy consumption used by Bitcoin is equivalent to approximately 130 terawatt-hours per year (based on an estimate).
At the same time, he notes that cryptominers are looking for the least expensive energy sources possible. For this very reason, one of the countries with the most “cryptocurrency farms” is China, which, by the way, under the pretext of environmental protection, has recently begun to tighten its grip on cryptocurrency farms.
The truth behind the ecological impact
Investor Nic Carter, partner at Castle Island Ventures, a public venture fund based on blockchain, and co-founder of the start-up Coin Metrics, published an article on CoinDesk with several clarifications on the matter, following a Bloomberg report that spoke of an “incredibly shady business.”
We are not going to quote the article in its full integrity, but just its most important points. One of these is that bitcoin transactions are a far cry from those of conventional credit cards such as Visa and Mastercard. At the same time, it warns that the latter rely on more complex schemes.
While bitcoins circulate through a mere network of dispersed and decentralized (also distributed) essence, conventional entities depend on several entities, either as intermediaries or as regulators of absolute instance, such as SWIFT, the banking system and government agencies.
The article goes on to recall that the equivalent of a bitcoin transaction (involving mining processes) would be equivalent to more than 706,000 swipes of a conventional credit card which, as mentioned above, would not only depend on the same entity that manages it (not even exclusively on the bank to which we belong).
A contradictory bet for digitalization
As the digitization of society progresses, more and more sophisticated IT infrastructures will be needed. The amount of information to be processed will be increasingly variable, fast, voluminous, valuable and accurate (this is why Big Data comes into play).
In fact, we are talking about quite sophisticated complexes, depending on the quality of service and the level of productivity to be ensured (there are several levels of sophistication, around scales such as the so-called TIER). Because it will not only be a question of having the service up and running.
Increasingly, a triangular theorem will come into play based on consistency, availability (preferably it will be high) and partitioning (basically distributing the work among different nodes to, for example, perform more operations in the shortest possible time).
There will be units prepared in case any equipment or cluster fails, thus avoiding chaos derived from the hypothetical paralysis of any service (regardless of whether they will be operating simultaneously or will revert to the suspended state when the failure is detected). There will also be backup centers and sets of clusters (grids) around the globe.
All this will entail higher energy consumption, and it is a very different matter for hardware engineering to develop components that not only allow operations to be carried out in a much smaller fraction of time, but also consume as little energy as possible.
We could talk about renewable energies, but as we have seen in Texas, it is not advisable to rely too much on them, especially where climatic conditions cannot ensure their absolute performance.
Anyway, the point is that when it comes, for example, to abolishing cash or deploying sophisticated monitoring systems based on Artificial Intelligence, no alarm bells ring (if anything, they may propose subsidies as an excuse to have more hostages of state welfare).
Therefore, what I am convinced of is that there will be a lot of interest in discouraging the use of monetary assets that put in check the collusion of crony capitalism between banking and statism. And if they are interested, they will resort to the “ecological myth,” which is so interesting for them to promote new advances in the statist economic strangulation.