Tom Seyer, hedge fund billionaire and advocate for the environment, has taken aim at Bitcoin, calling the cryptocurrency an environmental disaster.
“Bitcoin is a huge user of electricity, so to the extent that that electricity is derived from fossil fuels and is emitting greenhouse gases and other dangerous toxins, then it’s a problem,” Steyer told Yahoo Finance in an interview.
Steyer added, however, that if the leading cryptocurrency's energy sources were to change, moving away from fossil fuels, then Bitcoin would no longer be as damaging.
“If we’ve completely cleaned up our electricity generation so that when you in fact mine Bitcoin—and use a ton of electricity—but that is all clean electricity that’s not causing anybody’s health or the planet’s health to be dramatically diminished, then it’s fine,” he said.
Steyer also shared that he was presented with an investment proposal involving a Bitcoin mining operation “next to a coal plant,” and he did not pull any punches.
“The idea being you don’t have to transport the coal, it’s much cheaper, we’ll be able to create Bitcoin at a big spread to the current price, this is a big money-making opportunity—that is a disaster. That is a straight-up disaster,” he said.
Cleaning up Bitcoin
Steyer’s fundamental point is that Bitcoin would not be so damaging to the environment if it pivoted—in a substantial way—to relying on renewable energy sources.
That, however, has not happened—at least according to the best available data.
According to Cambridge University, only 39% of crypto mining energy comes from renewable sources. This, in turn, means that Bitcoin’s annual energy consumption (approximately 115 terawatt hours per year) translates to greenhouse gas emissions broadly equivalent to 54 billion pounds of burned coal.
Of course, those in the crypto industry have tried to paint a much greener picture. CoinShares estimated the figure is as high as 77.6%, but you have to consider the source—as a crypto asset manager, CoinShares has skin in the game of downplaying the industry’s impact on the environment.
The same can be said of the Bitcoin Mining Council’s lofty figure of 56%.
The Council was formed as a response to Bitcoin’s increasing criticism over the environment and is comprised of miners active in the industry.
The Council’s data, however, only represented 32% of the global hashpower at the time, and responses to the accompanying survey were voluntary—meaning miners with a not-so-green energy profile could skip the survey entirely.
Cambridge’s figure of 39% was published in September 2020, so perhaps it is high time for a renewed calculation, given the fact the Bitcoin mining industry has pivoted from China to the U.S. since the study took place.
Despite the emigration, Michel Rauchs, digital assets lead for the Cambridge Center of Alternative Finance, told Decrypt there was “nothing planned” to revisit the institution’s findings from last year.