Cryptocurrencies like bitcoinwere meant to be usedas digital cash.
Instead, theyve become popular as speculative investments.
As well as being resource-intensive andinherently wasteful, cryptocurrencies are also incredibly volatile.
But the current cryptocurrency market crash is more likely a combination of lots of factors.
However, the US Federal Reserve and the Bank of England recentlyincreased interest ratesby the largest amount since 2000.
Continuing COVID controls and Russiasinvasion of Ukrainehave also sobered up the markets.
Bitcoin was designed to be indifferent towards governments and banks,but investors generally arent.
Theyre cutting sources of risk from their portfolios anddumping crypto.
Cryptos loss, climates gain?
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Bitcoin has an annual carbon footprint of around 114 million tonnes.
Thats roughly comparable to 380,000space rocket launches, or the annual carbon footprint of the Czech Republic.
Proof-of-work mining can be thought of as a controlled way of wasting energy.
The process involves specialist computers repeatedly taking random shots at guessing a long string of digits.
The amount of computing power dedicated to this effort is referred to as the networks hash rate.
With the bitcoin price falling, the financial incentive to waste energy for mining bitcoin should be lower.
In theory, thats good for the climate.
The scale of this continued interest means bitcoin mining at current prices is probably still profitable.
But for how long?
Short-term capitulation among smaller mining outfits with high costs (often using intermittent renewable energy) is normal.
This event is calleda bitcoin death spiralin crypto-speak.
Besides bitcoin mining price predicaments, there are other potential tipping points to consider.
Bitcoin ban or boycott
Prominentinvestors may findbitcoin bear markets a bore.
Butresearch showsthe environmental losses from high-priced cryptocurrencies are far more disturbing.
Locals wanting to use these resources for productive purposes can bepriced out by bitcoin miners.
These communities also tend to face the sharp end of the climate crisis, which crypto mining fuels.
Governments worldwide want to appear keen on cryptocurrencies astools for economic growth.
For the global climate and a stable economy, cracking down now on crypto will be aboon for everyone.
But if environmental regulation efforts are not globally coordinated or far-reaching enough, cryptos climate contagionwill continue to grow.
