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The hidden cost of the cryptocurrency boom: they consume more energy than Ukraine or Sweden


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Bitcoin and other Blockchain-based tools have a huge energy cost. In the case of Tesla, it has evaporated all the CO2 emissions that the company has managed to save since its inception

CARLO ALLEGRIREUTERS
On February 8, Tesla communicated to the United States Securities Commission – the body that regulates the Stock Market and the companies that are listed on it – an investment of 1.5 billion dollars in Bitcoin. Tesla argued that this highly speculative security investment would provide “more flexibility to further diversify our business and maximize returns on our cash.”

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From a financial point of view the play is risky but it can end up going quite well. If he sold these Bitcoins today, for example, Tesla would have won more than all the profit made in 2020 from the sale of electric cars.

But there is a hidden cost in these cryptocurrencies, especially in Bitcoin, and it is a cost that in the case of Tesla is difficult to ignore: the environmental impact of their creation and sale.

MINING Bitcoin

The maximum number of Bitcoins that can exist is stipulated since the birth of the cryptocurrency in 2009: 21 million. At the moment, only approximately 18.65 million of them have been ‘mined’ or created, at a rate that is close to 900 new coins per day.

To ‘mine’ a Bitcoin, that is, to conjure it out of thin air, it is necessary to solve a series of mathematical puzzles that require an enormous calculation capacity and whose difficulty increases with time. This difficulty and induced scarcity is part of the philosophy behind this currency, as it avoids some of the problems faced by the fiat money we normally handle.

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But when we talk about enormous computing power here, it really is enormous. A computer is not enough. Not even a room full of them. Those who are dedicated to creating new Bitcoin use facilities with thousands of graphics processors (chips specially designed for high-speed parallel calculation) working non-stop 24 hours a day, to contribute a small part to solving these puzzles.

These machines consume an enormous amount of energy. And again, when we talk about huge here, it really is huge. The Center for Alternative Finance at the University of Cambridge estimates that the current mining process consumes about 129.9 hour teravatios of energy, about 0.5% of all energy produced on the planet.

This figure is roughly equivalent to the energy they consume Ukraine or Sweden. If Bitcoin were a country, it would be among the 30 most energy consuming in the world.

This energy, of course, comes mostly from non-renewable sources. It is difficult to calculate, and depends on many factors, including the region where these machines are located or the time of year, but with the current level of demand, fully fueling the Bitcoin infrastructure with renewables is simply impossible. Will be necessary 11 times the amount of solar energy of which is now produced on the entire planet, or 32 times the amount of hydroelectric energy.

TESLA

This puts Tesla in a difficult situation. Those 1,500 million dollars invested have been used to buy about 45,000 Bitcoins. Generating the energy needed to create these coins over the last year has meant the emission of the same amount of CO2 into the atmosphere that they would produce. 890,000 internal combustion vehicles driving on the road, according to energy analysis firm NextWave EFT.

It’s about twice the number of cars Tesla sold last year.

On its website, the electric vehicle manufacturer claims to have saved the planet from the emission of 3.66 million tons of CO2. It is a commendable figure. In the long term, and taking into account the emissions associated with the entire process of manufacturing and using internal combustion vehicles, it seems clear that electric vehicles, even if they are private vehicles, are a better alternative for society.

The decision to invest in Bitcoin, however, He has finished with a stroke of the pen with that saving. The emissions that have been produced to mine those 45,000 Bitcoin are close to 4.1 million tons of CO2. Tesla is now a company that has contributed to emitting more than 400,000 tons of CO2 into the atmosphere.

NOT JUST BITCOIN

As the cryptocurrency boom expands and other Bitcoin-like tools and currencies become popular, this environmental cost becomes difficult to digest.

In recent weeks, the attention of cryptocurrency investors has been diverted, for example, to what is known as NFT, a cryptographic tool that allows establishing the authenticity of a file by associating it with an entry in a blockchain.

This tool has proven to be incredibly useful in the digital art market. Thanks to it, artists can sell their creations as if they were physical objects. It is possible to reproduce them, create an identical copy (after all they are a collection of ones and zeros), but only the originals have the traceability that allows them to be certified as the original work of the artist. The CryptoArt.WTF website automatically analyzes the environmental cost of buying and selling these works of art and the figures are staggering. The creation and sale through NFTs of a small video or graphic file consume the same amount of energy that a resident in any country of the European Union consumes over months or even years.

There are several projects underway to try to reduce the environmental impact of Bitcoin and other currencies and crypto tools but even those that aspire to be powered by 100% renewable energy have to face a moral dilemma. Is it really justified to use these large amounts of energy for such nonessential applications?

According to the criteria of

The Trust Project

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Source site www.elmundo.es

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