Canadian CBDC Would Be More Eco-friendly Than Bitcoin: Bank of Canada

3 min read | May 27, 2021 07:48 PM AEST | By Anuj

Canadian CBDC Would Be More Eco-friendly Than Bitcoin: Bank of Canada — Image source: WorldStock, Shutterstock

Heated Crypto Equipment & Higher Energy Usage: 2 Inevitable Concerns

Cryptocurrency mining equipment, such as graphics processing unit (GPU) and application-specific integrated circuit (ASIC), take up more energy in a year than countries like the Netherlands, as per the Cambridge Bitcoin Electricity Consumption Index.

Mining machines suck up ample amounts of power while solving complicated mathematical equations to extract digital tokens. At the same time, supercomputers are also updating Bitcoin's decentralized ledger or financial record book, so peer-to-peer payments can be executed more swiftly than exchanging a Lonnie from one bank account to another.

While consuming enormous amounts of energy, these computers also produce massive heat, which is why they require a colder atmosphere.

Trust Factor: Bitcoin versus CBDC

Bank of Canada’s argument on energy-intensive cryptocurrency comes as green initiatives from the Canadian crypto mining community, including Hut 8 Mining (TSX:HUT), HIVE Blockchain Technologies (TSXV:HIVE), etc. are yet to emerge.

Mr Lane, in his address on Wednesday, stated that Canada’s CBDC would have an upper hand in terms of gaining peoples’ trust as Canadians have confidence in the central bank and its bills.

Meanwhile, Bitcoin and other cryptocurrencies arguably lack that level of trust among people. This factor is also contributing to creating regulation barriers for the overall crypto market.

The recent Chinese regulation update on the crypto market and the ban on the use of crypto coins in payments have created Fear, Uncertainty, and Doubt (FUD) among crypto investors. This is reportedly quite apparent in the current crypto market bull-trap.

Can Bitcoin & CBDC Coexist?

The BoC deputy’s statement indicates that Bitcoin might co-exist with CBDC, although it would make opting for a greener mining procedure for the crypto coin unavoidable in the long-term.

Bitcoin miners are said to be looking renewable energy usage and trying to streamline their crypto operations accordingly.

The above constitutes a preliminary view and any interest in stocks should be evaluated further from investment point of view.

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