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EXPERT COMMENT

Bitcoin is increasingly at odds with sustainability so a coordinated policy response is important, but could destabilize the entire cryptocurrency.

The global cryptocurrency market has been riding high of late and topped $2 trillion in April 2021 for the first time. But one of its best known advocates, tech entrepreneur Elon Musk, pulled the brakes on its rise when he announced Tesla would be suspending customers’ use of Bitcoin to purchase its electric vehicles. The decision wiped an estimated $365 billion off the market.

Cryptocurrencies such as Bitcoin are digital or virtual currencies – using decentralized networks based on blockchain technology – and are currently receiving renewed attention as a possible counter to the risk of post-pandemic inflation. At the same time, the debate has resurfaced about its fast-growing energy consumption, carbon emissions, and environmental impact.

While Bitcoin’s advocates have long downplayed the growing carbon footprint, it has become harder to ignore. The 'proof-of-work' mining – computers solving complicated mathematical problems – created to make transactions secure is an essential process requiring large amounts of energy, creating a fast-growing emissions impact already rivalling that of small countries.

Click here to continue reading the full version of this Expert Comment on the Chatham House website.