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Greenpeace has announced that its Bitcoin donation centre will be closed because it is “no longer tenable” in light of the climate crisis.
“Proof of work is proof of burning,” is fast becoming the dominant view of Bitcoin (BTC) among those who are serious about tackling the climate crisis. The words are from a United Kingdom government representative for this year’s COP26 UN climate talks, cited this week in the Financial Times.
According to the same post, environment campaigning organisations that have been reluctant to take a strong stance against Proof-of-Work cryptocurrencies are catching up and becoming more mindful of the climate risks involved. Greenpeace, which developed a Bitcoin donation channel in 2014, is now preparing to close it down. According to the association, though the alternative has not been widely used to date:
“As the amount of energy needed to run Bitcoin became clearer, this policy became no longer tenable.”
Most of the current understanding of Bitcoin’s energy crisis has certainly been galvanised by Elon Musk’s latest high-profile involvement, when the Tesla CEO revealed that the firm will no longer allow BTC as payment for vehicles due to worries regarding Bitcoin mining’s high energy usage.
Although Musk’s announcement had an instant and drastic effect on the cryptocurrency markets, causing Bitcoin’s price to plummet, the trend towards Bitcoin’s status as a “dirty currency” has been in the works for some time. Long-standing questions regarding the currency’s high energy usage are gaining momentum against the backdrop of a recent high finance consensus that is largely focused on sustainable investment strategies.
Critics of green measures set in motion by the European Union and others — which involve an attempt to escort capital into sustainable development assets — point to the ample room for “greenwashing” that current strategies underwrite. Nation-states are increasingly stepping in to “derisk“ development assets i.e. to guarantee profits against demand-side, political and climate-driven investment shocks, while the world’s largest asset managers are able to co-opt and capitalize on the green agenda for their own ends.
As the political battle over green finance continues to be waged, many political and financial actors are, nonetheless, increasingly taking the line that Proof-of-Work cryptocurrencies are a “dirty business.” The European Central Bank’s recent Financial Stability Review has highlighted the “exorbitant carbon footprint” of crypto-assets as grounds for concern, while the Bank of Italy’s comparison of its Target Instant Payment Settlement with Bitcoin highlighted that the former already had a carbon footprint that was 40,000 times smaller than Bitcoin’s by 2019.
Outliers persist: the the, potentially lucrative presence of megabanks like Goldman Sachs, Morgan Stanley, and Citigroup in the crypto industry exposes the true interests hidden behind these actors’ lip service to achieving sustainable finance targets.
Some experts continue to contend that climate threats are less of an imminent threat where crypto mining is driven by hydroelectric power and other renewable sources. Although over 70% of BTC mining uses some kind of sustainable energy, renewables account for less than 40% of overall energy used in the Bitcoin field. Furthermore, because of off-grid and informal mining activities, the number is difficult to measure and monitor.