- Bitcoin has lost almost 50% of its value since April when it hit a high of US$65,000, leading to serious concerns about its future and whether it should be considered a viable investment.
- Goldman Sachs revealed yesterday that Ethereum, the second-largest cryptocurrency, has a high chance of superseding Bitcoin as the world’s largest digital currency.
- Elon Musk met with some leading Bitcoin miners, including MicroStrategy CEO Michael Saylor, who tweeted on Monday that the group had decided to form a Bitcoin Mining Council to promote transparency regarding energy usage and accelerating worldwide sustainability initiatives.
The last few weeks has seen Bitcoin – the world’s largest cryptocurrency – go from record highs to crushing lows, taking out many investors in the process. But the question remains: Are the low prices Bitcoin is currently experiencing a good reason to purchase the digital currency, or can the embattled crypto sink even further?
Source: © Bonekot | Megapixl.com
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)
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.