Editor’s note: Even if you’re not a ‘tech head’, you can probably sense it. A great ‘digital disruption’ taking place in the financial world. Cryptos are just the tip of the iceberg…and our friends at Port Phillip Publishing held a free event to help you understand what’s happening. Read the note below for more… |
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Dear Reader, Recently Elon Musk made a big deal about bitcoin being bad for the environment. It hurt the prices of some of the biggest cryptos. But is it actually true? Here, as always, context is everything… Yes, the process of securing the bitcoin network relies on electricity. But that in itself doesn’t make it bad for the environment. The people that say this are usually the ones who don’t see any point in bitcoin at all. In their minds, any amount of CO2 emissions spent on BTC is therefore ‘bad’! If you think the fiat system of money is working well, if you think centralised control of money — where government money printing dictates winner and losers — is OK, if you’re comfortable with business becoming a game of how close you are to the fiat-laying golden goose…then fine, BTC has no value. As you’ll see here, we see a very different future that’s only just opened up. If you think a decentralised system of money, free from government control — a system that allows open and permissionless transactions in a free market — is a noble cause, then bitcoin is the best chance of that we have. Or as MicroStrategy founder Michael Saylor put it: | Source: @michael_saylor via Twitter | But let’s put bitcoin’s energy use in context too. Check out this chart: | Source: @hashoveride via Twitter |
More electricity is actually used on clothes dryers in our homes than on bitcoin. Ban the dryers! Then there’s the fact that an awful lot of energy used in the BTC mining process comes from renewables. You can never know this for sure, but some studies have suggested bitcoin mining uses close to 75% renewable energy. And this figure is only likely to increase. You see, the process of bitcoin mining actually lends itself to harnessing the power of renewables in remote locations that wouldn’t otherwise be economic. Think Iceland, Siberia, or even the Aussie outback. As Tillman Korb, head of bitcoin mining company Genesis Mining, told Euronews: ‘Cryptocurrency mining can also help electricity grids operate more efficiently and increase their use of renewables, Korb adds. ‘He believes that renewables are the natural future for cryptocurrencies. As Bitcoin’s value increases and the rewards for mining it decrease (a feature that is built into the cryptocurrency as more coins are “discovered”) electricity costs have to go down. ‘“There is more pressure on the cost side, for the miners and for that reason, only renewables can be the power source,” Korb says. ‘“If you just look at the incentives, it doesn’t make too much sense to use coal.”’ Then there’s this knock-out blow… Let’s compare bitcoin to competing monetary systems, shall we? | Source: @danheld via Twitter |
As it stands, bitcoin consumes less energy than gold mining (with a lot less environmental and political consequences) and far less than the current banking system with its army of ticket-clipping middlemen. Look, I’m certainly not saying bitcoin is a green solution. But what I can confidently say is the people spreading ‘fear, uncertainty and doubt’ (FUD) don’t have the first clue about how any of this works. That’s how FUD works. It’s an emotional argument designed to manipulate. Historically, listening to such misinformed (and I’d argue manipulative) FUD has been a very bad move for investors. Bitcoin’s transparent system makes it an easy target for simplified arguments that don’t stand up to scrutiny. Just remember the promise of bitcoin: To remove the power of centralised power over money. Also remember that bitcoin — and even cryptos as a whole — is only one opportunity for you to invest in and profit from this massive new shift. There are others. Watch this to find out what they are. Regards, Ryan Dinse, Editor, New Money Investor |