Bitcoin and its cryptocurrency brethren have been creating fortunes, destroying bank accounts, generating international business headlines, and igniting controversy for quite a while now. Therefore, it has been surprising that the U.S. government has left this world relatively untouched, refraining from apply pressure from its regulatory iron boot on the industry. Aside from stern warnings about volatility and risk and some changes to tax reporting, the statists have allowed a so-called wild west of finance to flourish – and crash – on its own. But Leviathan acolytes might have finally conjured up a reason to clamp down on the world of crypto: Saving the planet. Just ask Sen. Elizabeth Warren (D-MA).
Saving the Earth from Crypto
Speaking at a Senate Banking Subcommittee hearing on Jun. 9, Sen. Warren called for a crackdown on bitcoin and cryptocurrencies, calling them "environmentally wasteful." The former presidential candidate argued that new crypto regulations were critical to fighting the climate crisis since the amount of energy required to mine digital tokens is "a disaster for our planet."
"Cryptocurrencies like bitcoin are terrible for the environment, and that would be true regardless of whether we were getting anything productive out of that energy usage or not.
The fact that we're not makes it even more scandalous. One of the easiest and least disruptive things we can do to address the climate crisis is crack down on environmentally wasteful cryptocurrencies, and now is the time to do it."
In her business media rounds, Warren championed her cause for more regulations on digital assets, alluding to a lack of consumer protection laws. She told Bloomberg's Joe Wiesenthal that federal banking and securities regulators need to improve the framework for crypto consumers.
This is not the last bitcoiners will hear from Warren. She vowed to hold additional crypto-related hearings, and not everyone is pleased. For example, Jack Dorsey, Twitter CEO and crypto enthusiast, unfollowed the senator on the social media outlet. Yes, it is that bad!
The Environmental Impact of Bitcoin
Is bitcoin really destroying the planet? Some of the most recent estimates suggest that bitcoin mining was responsible for approximately 50 megatons of CO2 emissions every year. Cambridge researchers recently concluded that bitcoin consumes "more electricity than Argentina." Last year, the bitcoin network consumed about 120 gigawatts per second. The virtual asset's environmental impact is so immense that it prompted Elon Musk to suspend accepting bitcoin payments for Tesla purchases, pushing him to meet with North American miners to encourage them to adopt renewable energy.
Regulating Bitcoin for CBDCs?
Over the last few years, governments worldwide have been in the infancy stages of coming up with a digital currency that would compete with bitcoin. This was always a certainty. In 2021, it is only a matter of time before the United States introduces a central bank digital currency (CBDC). The introduction has become more urgent in the wake of China launching a digital yuan, amplifying its presence in cross-border transactions that some experts agree is part of the nation’s de-dollarization push.
With the rise of CBDCs, would policymakers make it their objective to eliminate the thousands of cryptocurrencies available to buy and sell at a click of a button? Because there are now too many whales involved in the crypto sphere, it is doubtful that bureaucrats will prohibit bitcoin and its partners. But that does not mean the Federal Reserve and regulators will steer clear of the sector.
The central bank has stated that a digital dollar would compliment bitcoin. However, considering that the institution has tergiversated repeatedly on the subject, it is hard to accept this assurance at face value. Using climate change as an excuse to limit bitcoin’s prominence could be effective. The Bank of Canada (BoC) recently stated that CBDCs would have less of a carbon footprint because they would not "have to rely on those environmentally, very wasteful methods of mining technologies that we've seen with cryptocurrencies."
Digital dollar, digital yuan, or digital loonie – the CBDCs are coming. But will they replace bitcoin?
Does Crypto Need Saving Anyway?
Big government advocates might embrace the concept of destroying something in order to save it. But does the crypto realm need rescuing anyway? Not necessarily. The crypto industry has been in existence for more than a decade, and the wild west atmosphere has been an efficient and prosperous machine. Indeed, most of the 10,000 digital coins are nothing more than speculative pump-and-dump schemes designed to exploit the public’s greed and hoping to catch onto something like bitcoin, Ethereum, or dogecoin. This is the fault of consumers who believe there is a stark difference between Safemoon, Safermoon, and SafeMars and that every new entry into the market will go to the moon. It is not the fault of the industry, which has manufactured currencies with rhyme, reason, and purpose.
Does bitcoin possess an incredible carbon footprint? Yes. Will the free-enterprise system come up with solutions? Musk, the self-proclaimed Dogefather and TechnoKing, is working with the industry to find renewable alternatives. The sector will likely produce more innovative solutions for its environmental impact and consumer fraud than the donkeys and elephants in Washington ever could.
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Read more from Andrew Moran.
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