- After Elon Musk tweeted that he would stop accepting Bitcoin as a mode of payment in Tesla, the value of Bitcoin plummeted, as the value of Dogecoin rose.
Mysuru: If you’re a cryptocurrency investor or at least a watcher, you know that the cryptocurrency market is going through a bit of a rollercoaster ride for over a week. The environmental impact of crypto mining has been lurking in the shadows for a long time now.
On the one hand, if the fear of adverse environmental impacts has led to the fall in Bitcoin value, the same environmental impact has caused the value of Dogecoin to see a conspicuous rise. Elon Musk, the Chief Executive Officer (CEO) of Tesla, Inc has been promoting Dogecoin for over a year now, and even though it’s also volatile (like all markets are for that matter), it’s still considered safer to the environment when compared to Bitcoin.
Elon Musk tweeted that Tesla would stop accepting Bitcoin as a mode of payment because of its huge environmental impact. A week after tweeting about Bitcoin, he again tweeted about Dogecoin, another cryptocurrency that caused to increase its value by 20 percent.
All of this happened in a little over a week causing massive fluctuations in the cryptocurrency market. Musk also tweeted, “SpaceX launching satellite Doge-1 to the moon next year — Mission paid for in Doge — 1st crypto in space –1st meme in space. To the mooooonnn!!” This tweet was followed by tweets of acknowledging increased fossil fuel usage because of bitcoin mining and asking for a carbon tax.
It’s a known fact that Bitcoin mining harms the environment given that it uses huge amounts of electrical energy. Mining of bitcoin is done using blockchain technology that in itself consumes huge loads of energy. Ideally, mining of one bitcoin takes around 10 minutes, and the electrical energy consumed is estimated to be around 72,000 GW (gigawatts).
Arvind Narayan, Associate Professor, Princeton University admitted at the United States Senate, Committee on Energy and Natural Resources, in 2018 that mining bitcoin has wider implications than what it leads to believe. He says that solving advanced computational math problems in purpose-built computers and cooling these devices requires a little less than one percent of world electricity consumption.
At the time when climate change issues and reducing carbon footprint have taken the centre stage in global political circles, the aforementioned issue is more serious than what it appears to be.
TRG Datacentres ranks all cryptocurrencies according to the amount of energy they consume, and according to this mining of Dogecoin consumes 0.12 KW/h (kilowatts/hour) as opposed to Bitcoin that consumes 707 KW/h.
In the last week, the value of Bitcoin plummeted to $37,856 on May 22 from $56,695 on May 12. The reasons are twofold. One, Elon Musk’s tweets saying that cryptocurrency mining cannot come at a greater cost to the environment, and China threatening to ban Bitcoin mining and trading. Even though the entire cryptocurrency market has been affected in the last week, Dogecoin increased by 20 percent from $0.29 to $0.41 in 24 hours.
The issue of environmental impact has affected both the cryptocurrencies, and the impacts are different. If one has caused the value to plummet, the other has caused it to go up. Elon Musk also has a considerable hold on the market, riding the high and low tides, causing the market to fluctuate through mere tweets. But, given the consequences of climate change throughout the world, it’s also imperative to make sure that the cryptocurrency market (be it Bit or Doge) will not add to the existing woes.
by Sindhu Nagaraj