‘There’s a real issue’ with environmental impact of bitcoin

Sen. Elizabeth Warren (D-MA) has questions about cryptocurrency, including whether it takes advantage of smaller investors. The progressive senator also wonders whether bitcoin is too easy to steal.

The former presidential candidate has been pushing for government intervention on both of those fronts and, in a conversation with Yahoo Finance’s editor-in-chief, Andy Serwer, this week, she raised another growing concern: the impact on the planet that has come with the rapid growth of cryptocurrency.

“I also think with bitcoin, and with the other cryptocurrencies, I think there’s a real issue about the environmental impact as well, this whole notion of how much energy is consumed just to keep the currency tracking going,” said Warren, who’s out with a new book, “Persist,” which is billed as both a personal narrative and a call for “political transformation.”

Compared to traditional currency, bitcoin has a relatively large carbon footprint because new bitcoin has to be “mined.” Bitcoin “miners” receive bitcoin as a reward for verifying and recording transactions that require massive amounts of computing power — which takes massive amounts of real life power.

Sen. Elizabeth Warren (D-Mass.) questions Xavier Becerra, nominee for Secretary of Health and Human Services, during his Senate Finance Committee nomination hearing on Capitol Hill in Washington, DC, U.S., February 24, 2021. Greg Nash/Pool via REUTERS

Crypto miners’ energy needs have already disrupted the grid of an entire town, and consumption grows the more popular these currencies become.

“You don’t consume that kind of energy, in order to have money on deposit at a bank or a mutual fund,” Warren told Yahoo Finance. “In that sense, bitcoin is very different and in a 21st century, we’re becoming a lot more sensitive to the worldwide impacts of the choices we make.”

Warren spoke to Serwer in an episode of “Influencers with Andy Serwer,” a weekly interview series with leaders in business, politics, and entertainment.

‘Going too end badly’

There have been different efforts to measure the environmental impacts of bitcoin. The electricity used to mine bitcoin each year exceeds the individual annual electricity consumption of Ukraine, Sweden, or Argentina, according to an ongoing study from the University of Cambridge’s Judge Business School. 

Warren is far from alone in expressing concerns over bitcoin. Microsoft founder Bill Gates, who has worked to fund efforts at combating climate change, has also raised the alarm over the cryptocurrency.

“Bitcoin uses more electricity per transaction than any other method known to mankind, and so it’s not a great climate thing,” Gates told Andrew Ross Sorkin of The New York Times in February.

It’s unclear whether governments around the world will enact regulations to mitigate these impacts, but the industry has taken some steps to regulate itself. In April, energy, cryptocurrency, and fintech leaders signed onto a “Crypto Climate Accord” seeking to have all of the world’s blockchains powered by 100% renewables within four years. Meanwhile, payments company Square (SQ) has responded to the increasing public pressure by pledging to support greener bitcoin mining practices and to become a zero-net carbon contributor by 2030.

Still, even if bitcoin’s environmental impacts are reduced, Warren will likely continue to have questions about the cryptocurrency. As she told CNBC in March, agreeing with a sentiment expressed by Treasury Secretary Janet Yellen, “It’s speculative in nature and going to end badly.”

Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.

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