The collapse of cryptocurrency prices has given a “dose of hope” about slowing climate change, which is considered “good news” for the world, according to a website.The Conversion“.
In addition to being energy-intensive to “mining” them (a word for digital currency production), and wasting natural resources, cryptocurrencies are also “incredibly volatile”.
Cryptocurrencies such as Bitcoin were supposed to be used as digital cash. Instead, these currencies became popular as “speculative investments”.
The prices of the largest cryptocurrencies, such as Bitcoin and Ethereum, have fallen by more than 55 percent in six months, leading some to suggest that “regulation” is necessary to contain the “turmoil” in this volatility.
The collapse of the cryptocurrency market is likely to be caused by several factors, and it is unlikely to be due to the TerraUSD coin, which is supposed to be linked to the US dollar.
The site explains the reason for investing in digital currencies, and says that “for years, interest rates have been close to zero, making bank bonds and treasury bonds seem useless as investments, while cryptocurrencies and non-fungible digital tokens (NFTs) look attractive.”
It is noteworthy that the US Federal Reserve and the Bank of England recently increased interest rates by the most since 2000. The closures to combat Corona and the Russian invasion of Ukraine also affected the markets.
It is reported that “Bitcoin” is not tied to governments or banks and the decisions made by them, but investors are generally not. They want to keep “risks” out of their wallets and get rid of cryptocurrencies.
On the connection of currency production operations to climate change, the site says that “the most polluting cryptocurrencies during mining operations, such as Bitcoin, Ethereum and Dogecoin, together use about 300 terawatt-hours (TW/h) of electricity that is mainly fueled by fossil fuels each year.”
Bitcoin’s annual “carbon footprint” (total emissions) is around 114 million tons, which is roughly equivalent to launching 380,000 space rockets.
Mining is considered a method of “wasting energy”, a process that uses specialized computers to produce digital currencies, and most mining devices in the world consume electricity generated by coal-fired power plants.
The higher the price of the cryptocurrency, the more mining companies are willing to pay for electricity, because the profits outweigh the costs.
As the price of bitcoin has fallen, the “financial incentive to waste energy mining bitcoin is less,” and the costs outweigh the profits. In theory, this is good for the climate, because the use of electricity becomes less and therefore emissions are reduced.
Several governments appear to be “careful about cryptocurrencies as tools for economic growth,” but the crash in prices shows that bitcoin is “useless as an essential medium of trading,” and its value is “not reliable.”
To maintain the global climate and economic stability, “strict measures” must be taken to confront cryptocurrencies, and this will be considered a “blessing for all,” according to the site.