The incredible energy used to collect bitcoin makes cryptocurrency unattractive to institutional investors, while raising serious concerns about its impact on the environment, warns Kleinwort Hambr’s head of investment Fahad Kamal at Soc General.
This is because bitcoin uses more energy per year than what is consumed by the whole of Argentina and Ukraine, according to estimates by the University of Cambridge. Bitcoin is collected or mined when computers are connected to the cryptocurrency network to verify and validate bitcoin transactions. As a reward for this problem-solving process, miners can receive small amounts of bitcoin. Some miners have even set up entire computer warehouses in an effort to collect even more bitcoin, but using huge amounts of electricity.
As the price of bitcoin rose epically in February, exceeding the $50,000 mark, many investors are now raising serious questions about bitcoin’s energy consumption. Bill Gates recently stated that this cryptocurrency uses more electricity in every transaction than any other metal currently used in humanity. Fahad Kamal is stating that the mining process raises serious environmental and social issues, which are taken seriously by the financial world.
Of course, there is the other side, which argues that the above concerns are excessive, since in the future the process of collecting or mining bitcoin will be done with renewable energy sources. A separate study by the University of Cambridge published last September stated that 39% of bitcoin mining today is done from renewable sources, mainly with hydroelectric power.