Following on from a volatile weekend, crypto investors have been left with massive amounts of losses after Elon Musk, China and regulation fears have all caused many popular cryptocurrency tokens to fall sharply in the recent days.
As presented by the chart above, the volatility of Bitcoin has seen its worth fluctuate. It has gone from it’s highest at $45,000 to its lowest at $33,000 in a matter of days. Not only has this affected individual investors who have lost millions of dollars, but it has shaved billions off the crypto market. As a result, the value of several cryptocurrencies across the market have dropped. In only 24 hours alone, the market lost 9% of its share following a deep correction.
Many prevalent cryptocurrencies such as Bitcoin, Ethereum and Dogecoin are victims of the plummet. Additionally, they are struggling to reach values as high as April. The turmoil has set crypto prices yo-yoing through the week, dropping by as much as 14.5% for currencies like Bitcoin.
Other currencies such as Etherum, the world’s second-largest crypto, crashed by an alarming 23%, following a similar trajectory. Unfortunately, Blockchain-based technology has also felt the pinch of the downwards spiral as a response to China’s crackdown and Elon Musk’s comments.
China announced that it would be taking preventive measures. This includes mining, selling, and buying Bitcoin, as part of its plans to prevent and control financial risks. The announcement comes after a crackdown on illegal societies and activities.
They claim that digital currencies are not real and should not be used to purchase goods. However, many larger retailers are considering accepting crypto as a means of paying for goods.
Elon musk has also caused cryptocurrency instability thanks to this U-turn on Bitcoin. Via Twitter, Musk first announced Tesla would be accepting Bitcoin as a payment method.
However, although Tesla has backed Bitcoin for years, it’s taking a turn. Recently Musk sent Bitcoin tumbling unexpectedly after withdrawing Tesla’s support for Bitcoin payment. The unexpected U-Turn came after he announced that acquiring Bitcoin, which involves mining, has too much of an environmental impact.
As Bitcoin has grown in popularity, what are the environmental implications of acquiring it and other cryptocurrencies?
How Green is Bitcoin?
Across the world, environmental groups have been questioning the impact of mining Bitcoin and other cryptocurrencies. They are lining up to slowly disable the use of crypto until it learns to become green. Following Musk’s tweet, the environmental impact of Bitcoin has been firmly in the spotlight. Greenpeace USA is also making an announcement. they will no longer accept charitable donations in the form of Bitcoin.
Bitcoin is slowly developing an unwanted reputation. Not only is it violently volatile, as mentioned above, it also has huge environmental implications making it less attractive for investors. The mining of Bitcoin itself consumes as much electricity as a medium-sized European country.
The amount of energy used to mine Bitcoin was not in the spotlight until 2017 due to a price increase that pushed up its needs. As the demands for Bitcoin grows, it increases in value. Unfortunately, energy consumption will also increase, making its carbon footprint exponentially worse.
The mining process to generate new Bitcoins involves solving an array of complex arbitrary mathematical equations which require a vast amount of computer power. Until this process is made greener, Bitcoin will always be seen as harmfully impacting the environment.
With this in mind, naturally, Bitcoin and crypto miners gravitate to countries and places where electricity is the cheapest in the world. This means there is no genuine issue with Bitcoin itself, just its process and the lack of affordable renewable energy available and being produced.
In efforts to mainstream Bitcoin and help it shake off its non-environmentally friendly reputation, there are a range of solutions. Some professionals are encouraging eco-friendly mining facilities which are already operating at a large scale.
For example, in Norway and Iceland, nearly 100 percent of all energy production is renewable, which lets cryptocurrency miners take advantage of cheap hydroelectric power to power their mathematical problem-solving machines. The ambient temperatures also remain cool in these countries, which helps to reduce and cut the cost of cooling the mining machines naturally.
This indicates there is a way forward to mine crypto in a more environmentally friendly way. In addition, the backlash it’s receiving may lead to pathways of innovation for the future. As we see time and time again, we invent technology for one thing, but then use it in different industries.
For instance, take blockchain technology created as a supportive technology for Bitcoin. It has now found its way into many different industries and processes. New Bitcoin mining technology could find its way into manufacturing, making the process easier and more cost-effective, making the possibilities endless.
Author: Yasmita Kumar