Have you sold all your Bitcoins? Sustainability Versus Risk

May 25, 2021 05:04 PM AEST | By Team Kalkine Media

Have you sold all your Bitcoins? Sustainability Versus Risk — Image source: amonphan comphanyo, Shutterstock

The Future of Bitcoin as a Sustainable Investment

If the past three weeks have revealed anything, it is the extreme volatility of not just Bitcoin but the crypto market as a whole. In the last week alone, around US$1.3 trillion has been lost from all cryptocurrencies.

Experts have declared that it is unlikely Bitcoin will even remain the largest cryptocurrency. Analysts at Goldman Sachs revealed yesterday that Ethereum, the second-largest cryptocurrency, has a high chance of superseding Bitcoin as the world’s largest digital currency. The Goldman Sachs report claims Ethereum, which has a current market cap of around US$250 billion compared with Bitcoin’s US$660 billion, has more real uses as a store of value compared to Bitcoin. It is this distinction that will likely see it replace Bitcoin as the world’s premier crypto.

Elon Musk Pushes for Transparency of Energy Consumption

In addition to this, Bitcoin’s most recent woes have been precipitated by its costly damage to the environment. Tesla (NASDAQ:TSLA) Founder and billionaire, Elon Musk, sent Bitcoin plummeting when he announced that Tesla, the trendy electric car company, would cease accepting Bitcoin as payment for their vehicles. He cited the reason for the decision as the harsh environmental impact that comes of Bitcoin mining.

The SpaceX CEO met with some leading Bitcoin miners over the weekend, including MicroStrategy CEO Michael Saylor, who tweeted on Monday that the group had decided to form a Bitcoin Mining Council in an effort to promote transparency when it comes to energy usage as well as accelerating worldwide sustainability initiatives.

Bitcoin Mining (Source: © Arinahabich08| Megapixl.com)

Musk described the initiative, which requires miners to publish their energy usage, as potentially promising. The tweet from Musk was immediately followed by Bitcoin’s price rallying 15% to almost US$39,100.

Environmental Cost of Bitcoin

Although there has been some debate over whether Bitcoin mining uses renewable energy, a study by the Cambridge Center for Alternative Finance claimed the energy used to mine Bitcoin on an annual basis is equivalent to that of some small countries, which is a frightening statistic.

In response to this, Musk called for audits of Bitcoin miners, saying that the environmental cost could be easily determined if the top ten mining companies posted audited numbers of renewable energy versus non-renewable energy.

Environmental impact of Bitcoin mining (Source: © L9871456 | Megapixl.com)

The Verdict

Through all the madness which has plagued Bitcoin over the past few weeks, it is clear that the fluctuating crypto faces profound challenges as it moves into the end of the financial year, with serious environmental concerns coupled with pressure from alternative digital currencies, which potentially offer more real-world value. What remains problematic, however, is Bitcoin’s potential as a solid investment option. Given that a simple tweet from a single person can evidently see the price shift dramatically in either direction at any given time, it appears that the challenges for the embattled crypto are far from over.

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (Kalkine Media, we or us), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.