Crypto is finally going green! – The street
Elon Musk in May 2021 created a disaster by announcing on Twitter that Tesla would no longer accept bitcoin payments for the purchase of its cars.
The killer tweet came just over three months after the electric car maker announced it would accept bitcoin and invest in bitcoin.
“Tesla has suspended vehicle purchases with Bitcoin,” the billionaire said on May 12, 2021. We are concerned about the rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.
“Cryptocurrency is a good idea on many levels, and we believe it has a promising future, but this cannot have huge costs for the environment (…) We are also looking at other cryptocurrencies that use
A big change
That day, bitcoin prices collapsed by more than 20%.
But most worrying from the cryptosphere was that Musk’s message would shine a spotlight on the environmental impact of cryptocurrencies. From that moment, the media began to investigate the energy consumption of the process of validating blocks of transactions on the Bitcoin blockchain and other blockchains. The process is called proof-of-work.
Researchers found that most blockchains use much more energy than many countries. The timing was bad as all this came at a time when the young industry was trying to attract beyond its aficionados.
Scroll to Continue
All this does not bode well for crypto, which presents itself as a revolutionary technology for the future. How to belong to the future when you help to pollute the planet? This is a question that has dogged the crypto space for months now.
One of the consequences is that some institutional investors have preferred to stay on the sidelines for fear of being accused of violating ESG – environmental, social and corporate governance – the trendy acronym in business circles.
The wait is soon over as Ethereum, the No. 2 blockchain behind Bitcoin, has just completed a software update that will reduce energy consumption by 99.95%. This feat was achieved by changing the way things are done. Basically, transactions will now be validated by a new mechanism, proof-of-stake, which does not require the use of many computers at the same time as with proof-of-work.
To feel good
It’s not as technical as it looks. What crypto fans will tell us is that we can now invest in ether, the original token of Ethereum, buy and create the famous non-fungible tokens (NFT) or obtain a loan through a crypto company with a clear conscience since the platform’s CO2 emissions have been greatly reduced.
Ethereum enables the unification of climate change defense and crypto. Investing in projects run on Ethereum is being a friend of the planet. Basically, a crypto investor is also socially conscious. There is no doubt that hesitant and cautious institutional investors now have a good excuse to get into crypto. It is elegant and responsible for a restaurant in the city to say that they are investing in an innovative, hyped and environmentally friendly resource.
If all this serves to make us feel good, the problem is that Bitcoin, Ethereum’s rival, will continue to run like nothing ever happened. It is therefore hard to really believe that the cryptosphere will suddenly become environmentally friendly while bitcoin (BTC), which represents 37.4% of the crypto market according to data firm CoinGecko, continues to consume a lot of energy.
