Elon Musk wakes up to the fossil fuel issue of Bitcoin


Tesla founder Elon Musk recently named himself “Technology”, Or the king of technology. A Better Monica May be “Wizard of Oz”.

Entrepreneurs have the amazing ability to pull the strings of the crypto world. In February, biscuin prices jumped when Kasturi revealed that the company was Bought 1.5bn The value of cryptocurrency. The price of dogecoin also went up following the same national Delphic tweet.

But last weekend dogecoin melted Musk when admitted On an American comedy show So that the asset can be “rushed”. And now Bitcoin has slipped too much Another tweet, This time one has revealed that Tesla will no longer accept bitcoin to buy electric cars. “We are concerned about the increasing use of fossil fuels for bitcoin mining and transactions, especially coal,” Kasturi said.

Staff And journalists Of course I have been raising this issue for months. Two interesting figures encapsulate the problem.

First, It seems that To date, two-thirds of Bitcoin has been mined – created using computing algorithms – in China. Information Center Dependent on the electricity produced by coal. In fact, Bitcoin’s link to black things is so narrow that crypto expert Alex Lipton notes that the price of Bitcoin goes up whenever there is an accident at a Chinese coal mine.

Second, the t 2tn crypto market has expanded so fast that it is globalizing huge amounts of energy. Mining bitcoin, which serves as half of all cryptocurrencies, is currently using the same amount of energy annually in 2019 as in the Netherlands, Sci scientists Warn This threatens Paris’s climate targets.

Bitcoin enthusiasts such as entrepreneur Anthony Scaramucci have noted that the context of statistics is necessary and that traditional theoretical meanings are also energy-intensive.

There are other types of technology as well. As Paper Former AI research co-author of the Artificial Intelligence Unit notes some of the AI ​​processes behind Google Search “Assume the need Power like trans-American flight. ”

Even with this kind of caution, Bitcoin’s carbon footprint is embarrassing, not just for Tesla, but for millennial crypto investors who care about the green issue. And this highlights three big lessons for all investors.

First, one cannot ignore environmental, social and administrative concerns today, even in stocks marked as ESG. Tesla is characterized by many ESG funds because investors have turned their attention to electronic car points and ignored other issues.

However, digital transparency is now enabling employees to monitor firms’ activities more effectively than ever before, which means investors need a side view when valuing firms, as ESG risk is rarely fixed or binary and often involves constantly shifting trade-offs. .

Second – and leading from this – investors should see the debate around the carbon footprint of technology as an example of this shifting landscape. A scandal is underway to tackle Bitcoin’s carbon issues. Rocky Mountain Institute, a clean energy nonprofit, Recently joined the force Anyone with UN officials and Fintech leaders to explore solutions can implement changes to reduce energy costs in computing processes around crypto; Last week a “green” cryptocurrency that uses less processing power Share Is turned on.

Another option is to use green electricity sources, for example switching to Chinese coal for Icelandic hydropower. Enthusiasts like Scaramucci think that if there is a registry that enables investors to track the introduction of bitcoins, it can solve the problem.

It is unknown at this time what he will do after leaving the post. But the controversy probably explains why Kasturi sent his tweet. And why experienced veteran investor Stanley Drakenmiller Said this week It’s not clear which cryptocurrency will eventually dominate (assuming you think, as Drukenmiller does and I do, that crypto is here)) Very few people predicted 15 years ago that Facebook, not MySpace, would dominate social media.

The third issue is about control. The reason why impunity can act like a crypto wizard is because the sector is opaque and largely uncontrolled. Financial policy makers are there now A crackdown threat.

However a Report From the Bank of International Settlements notes, “most of the world’s jurisdiction” has not implemented controls to stop money laundering, let alone market manipulation. There is also “significant variability in the definition of the regulatory perimeter across jurisdiction”. Caring is a hassle in plain English.

Liberals like it. So musk. But if crypto becomes more mainstream – including some tokens – it needs to get worse Responsibility And transparency. It may be impossible to obtain a source of opposition to the founding of a given crypto.

The fight against the green standard, however, will probably start the process by providing a reason for young crypto-enthusiasts to rally around. If so, it could be the biggest consequence of Muskie’s tweets, and investors and regulators could be embarrassed by the cumbersome screening of Chinese mines, both coal and computing.

gillian.tett@ft.com





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