Abdul discusses how the next global 'trend', the cryptocurrency Bitcoin, may cause a negative impact on our net-zero targets.
As the world transitions towards a digital society, the COVID-19 pandemic has made us appreciate the technology that we have taken for granted. Instantaneous remote communication, online shopping and new forms of media consumption have completely warped the fabric of modern society. The next 'trend' that has silently become the centre of attention is the cryptocurrency called Bitcoin.
A digital currency makes total sense when you consider the rapid acceleration we are experiencing in the digital world. Bitcoin is a decentralised form of currency. This means that any transaction made using Bitcoin is essentially immune to any form of government or corporate scrutiny. This anonymity has made Bitcoin particularly lucrative for those selling illegal products on the dark web. But it may soon appeal to the wider, corporate world.
During the COVID-19 pandemic, the currency has seen a meteoric rise in value. It remains a very volatile asset, which critics point out as problematic if businesses are to begin accepting it as a verified form of payment. This however has not stopped Elon Musk, the founder of Tesla, another asset that has seen an explosion in value during the pandemic. Musk recently announced that Tesla would begin accepting Bitcoin as payment in the near future. Whether this is a wise move for Tesla remains to be seen since the usage of this currency is still not widespread.
One of the perks of Bitcoin may also be its downfall. In order to produce new Bitcoin, it must be digitally mined. This is analogous to mining metals to mint physical coins. Bitcoin mining, however, is a computational process that consumes huge amounts of energy. An analysis by the University of Cambridge, released in 2021, suggests that it consumes more electricity than Argentina in a whole year. This staggering thirst for power is unlikely to slow down unless the value of the currency goes down. This puts pressure on Tesla's clean energy stance, since carbon-emitting processes may be fuelling Bitcoin's enormous energy demands. Another big issue is the disruption that Bitcoin may inflict on China's carbon-neutral plans. The country accounts for nearly 75% of global mining power which is set to increase over the next decade. Cheap electricity prices in rural areas have made it an attractive site for the power-hungry servers.
Without global intervention, Bitcoin may cause a significant halt in our net-zero targets. The past year has seen its value increase to record highs and this trend shows no sign of slowing down. Bitcoin, however, is just one example of the world's ever-increasing demand for electricity. The pandemic has highlighted several other areas of our economy which will follow in its footsteps; the rapid increase in electric vehicle usage, the continuing rise of digital media consumption and video communication (the data servers that we use to access streaming services such as Netflix, use an enormous amount of energy) and the transition from traditional gas heating to electrical solutions. It is vital that we limit our carbon-intensive production methods rather than increase them as a result of these new demands.
ABOUT THE AUTHOR
Abdul Hamid is a 3rd year Physics student and is interested in exploring a career in the nuclear energy industry, a source of energy that could help battle the effects of fossil fuel emissions. Abdul is also interested in the promising research being undertaken to perfect the nuclear fusion process, a possible game-changer in the future of energy.