In brief
- Supporters of Bitcoin have rushed to the cryptocurrency's defense after Elon Musk's u-turn shone a light on its carbon footprint.
- They argue that Bitcoin is greener than the petrodollar, since the latter is fundamentally backed by the U.S. military.
Bitcoin is more environmentally friendly than the petrodollar, according to Alex Gladstein, chief strategy officer at the Human Rights Foundation, and James McGinniss, CEO and co-founder of David Energy. Both individuals appeared on the Unchained Podcast with Laura Shin earlier today.
The discussion took place against the backdrop of Tesla CEO Elon Musk’s shocking u-turn on Bitcoin. Three months after overseeing Tesla’s $1.5 billion investment into Bitcoin, Musk announced that the company would no longer accept BTC as a form of payment due to concerns about its climate impact.
“We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel,” Musk said, adding that cryptocurrency progress cannot come at the expense of the environment.
According to Gladstein, Musk’s decision to reverse course is a reaction to bad PR from environmentalists after buying BTC in the first place. “What happened afterward was a big backlash by people who believe Bitcoin is bad for the environment,” Gladstein said.
Gladstein and McGinniss are only the latest crypto advocates to come to the leading cryptocurrency's defense. This time, the two compare the leading cryptocurrency with the petrodollar.
What is the petrodollar?
Broadly speaking, the petrodollar is the system of exchange that governs U.S. dollars being paid to oil-exporting countries for oil.
Both analysts argued that the petrodollar is fundamentally backed by the U.S. military, which is estimated to consume—much like Bitcoin—more energy than many of the world’s countries.
In fact, in 2017, it was estimated that the U.S. military used up to one million barrels of oil per day, which would, in turn, make the U.S. Defense Department the world’s 55th largest emitter of carbon dioxide if it was a country.
Thus, according to Gladstein and McGinniss, environmentalists ought to criticize Musk and Tesla for accepting the U.S. dollar, not for having invested $1.5 billion into BTC. “I think it’s rich that people are attacking Elon for taking Bitcoin as payments when they should be a lot more critical of him taking the dollar for payments,” Gladstein said.
Coming to Bitcoin’s defense
Gladstein and McGinniss put their case forward in two parts. First, they provided several arguments in favor of Bitcoin, despite its energy consumption.
“Bitcoin’s energy intensity is a feature, not a bug; it’s what creates security,” said McGinniss, adding, “From a technology standpoint, that’s actually what makes Bitcoin so fantastic.”
Gladstein also claimed that there is a very significant moral argument for Bitcoin, namely, that it provides people who live under state inflated national currencies access to capital.
“There are 1.2 billion people out there who live under double and triple inflation; there are 4.3 billion people out there that live under authoritarianism,” Gladstein said, adding, “Those who say Bitcoin has no social value, I’d love to see them commit to using the Sudanese pound for one year, and then come back to me and say that Bitcoin’s value is overblown or doesn’t exist.”
But regardless of whether someone buys into Bitcoin’s moral argument or not, both analysts maintained that Bitcoin’s chief goal was to be a “geopolitical disruptor.” In other words, Bitcoin was designed to take on the petrodollar.
“Bitcoin is actually a competitor to the world reserve currency, which I will call the petrodollar,” Gladstein said, adding, “that’s what its ultimate mission is, to replace the petrodollar.”