NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, December 5, 2017

“Bitcoin is the World’s Hottest Currency, but No One’s Using It,” the Wall Street Journal proclaimed on Saturday. The day prior, the digital currency had surged past $10,000 per coin—and then past $11,000, too. But despite Bitcoin’s value, the paper explained, brick and mortar stores have been slow to accept it as a method of payment. Thus, some observers are becoming pessimistic about whether this tech-hipster cryptocurrency, which everyone has heard of but most people don’t truly understand, will ever replace traditional currency. “I don’t think it will be a currency,” bitcoin investor Alex Compton told the Journal. “If people use it as a currency, it will lose value as an investment.”

No one may be using Bitcoin, but we’re all paying for them. Bitcoin analyst Alex de Vries, otherwise known as the Digiconomist, reports that the coin’s surge caused its estimated annual energy consumption to increase from 25 terawatt hours in early November to 30 TWh last week—a figure, wrote Vox’s Umair Irfan, “on par with the energy use of the entire country of Morocco, more than 19 European countries, and roughly 0.7 percent of total energy demand in the United States, equal to 2.8 million U.S. households.” (As of Monday, the figure had reached nearly 32 KWh.) Just one transaction can use as much energy as an entire household does in a week, and there are about 300,000 transactions every day. That energy demand is more often than not met through fossil fuel energy sources, which, along with polluting air and water, emit greenhouse gases that cause climate change.

Photo courtesy of Christian Ditaputratama.