Bitcoin mining causes less CO2 emissions than computer games, according to crypto service provider
In the crypto space, China’s ban on bitcoin mining, as well as El Salvador’s adoption of bitcoin as a currency, are likely to have consequences for exchange rates in the current and coming years.
According to Bitcoin Suisse, the exodus of bitcoin miners from China has clear geopolitical implications, Bitcoin Suisse head of research Markus Dapp said during the presentation of the new “Crypto Outlook 2022” report. With China taking itself out of the game, the U.S. now provides more than a third of the computing power used to validate Bitcoin transactions. Mining activities have also increased sharply in Kazakhstan, Russia or Canada.
The adoption of bitcoin by El Salvador is also likely to have geopolitical implications. With this step, the Central American country went against the explicit recommendations of the International Monetary Fund (IMF) and the World Bank, Bitcoin Suisse reminds. Now, it remains to be seen whether other countries will join in 2022, he added.
Lightning technology in the spotlight
El Salvador’s move has put the spotlight on Lightning technology, which is built on the Bitcoin network, as it allows fast and cheap Bitcoin transactions. As a result, El Salvador residents now have a secure and cheap way to receive foreign remittances that are vital to their survival. Against the backdrop that 70 percent of the population is unbanked, this is a crucial factor for security and crime prevention: according to Dapp, criminals in El Salvador would have specialized directly in robbing people as they leave money transfer offices such as “Western Union.”
In general, the crypto expert believes that the positive social impact of Bitcoin is underestimated. What plays only a minor role for countries with functioning banking systems like the Western European region, however, could change lives for the 1.7 billion unbanked people worldwide.
Bitcoin: More environmentally friendly than gaming
Bitcoin Suisse economists also put the accusations of cryptocurrencies being highly damaging to the environment into perspective and consider the frequently drawn comparisons of Bitcoin energy consumption with that of a country to make little sense, since according to estimates Bitcoin consumes 188 TWh annually, or about 0.12 percent of global energy production. If one contrasts this with the energy consumption of gold production (571 TWh) or computer games (214 TWh) or the annual Christmas lighting (201 TWh), a completely different picture emerges.
ETH facing a key year
An important year lies ahead for Ethereum, whose “smart contract” blockchain has seen an explosion of applications in areas such as DeFi (Decentralized Finance) and NFT (Non Fungible Tokens) over the past year. However, ETH faces strong competition: fast-growing competitors such as Solana, Cardano and Polkadot are waiting in the wings and threaten to overtake the number 2 in the crypto market. ETH wants to assert itself with the technical step to the significantly more complex “Ethereum 2.0”, which includes, among other things, the change to the significantly less energy-intensive “Proof of Stake” process. According to Gapp, the complex undertaking is akin to “open-heart surgery” with a 50-50 chance of success. If something goes wrong, or “there are delays, then the competition will keep gaining.”