Environment, social and govt concerns to crime: Bitcoin’s dark side draws scrutiny
Bitcoin has enjoyed a blistering rally since last fall, but that ascent has also renewed attention on environmental, social and governance concerns surrounding the world’s most popular cryptocurrency.
Bitcoin’s latest rally to another all-time high north of $60,000 may have lost some steam this week, but its blistering ascent since last year has reignited concerns about the toll Bitcoin is taking on people and the planet.
In the United States, President Joe Biden’s administration has voiced concerns over Bitcoin’s role in money laundering, the potential fallout of financial speculation, and Bitcoin’s environmental impact.
In China, where more than half of new Bitcoins are mined, the vast amounts of energy required to do that are at odds with Beijing’s climate goals, prompting a crackdown by authorities.
Unlike fiat currencies (such as US dollars, euros or yen), Bitcoin is not controlled by a government or central bank, nor does it require a middleman to verify transactions. It is, by design, decentralised.
Instead of a bank, transactions made with Bitcoins are verified by a global, decentralised network of computers (aka mining rigs) that race to verify blocks of transactions to add to Bitcoin’s blockchain – a public ledger. The winner is rewarded with new Bitcoins.
Mining rigs are composed of very powerful computers, sometimes thousands of them, labouring in unison to solve complex math problems. That requires a lot of energy.
Bitcoin proponents argue that it is being held to an unfair standard, arguing that the vast financial systems that undergird fiat currencies consume far more resources than cryptocurrencies do.
But that has not stopped some governments from taking action to rein in Bitcoin’s carbon footprint.
Source – Aljazeera News