Bitcoin mining is too energy intensive — that’s the message that International Monetary Fund (IMF) Managing Director Christine Lagarde has for advocates of the flagship cryptocurrency.
Lagarde, who was speaking from Davos at the World Economic Forum, said that Bitcoin mining is an “energy angry” industry, a factor that the IMF finds concerning.
“The Bitcoins mining, which is this accelerated and augmented use of computers to actually determine the value and incentive the functioning of the mechanism, is energy angry,” Lagarde said in Bloomberg TV interview. “And we figure that in 2018 if it continues that system will actually consume as much electricity as Argentina.”
According to Bloomberg, the Bitcoin mining industry’s collective power consumption tripled in 2017, reaching a peak daily usage of 43 GWh in December.
Many analysts and environmentalists have sounded the alarm on the industry’s power usage, and Lagarde said that it has turned in to a “big concern” given that the world is already battle climate change.
“In times of climate change and when we look at how much coal is being used in some Chinese provinces to actually mine Bitcoin it’s a big concern,” she concluded.
However, despite such clarion calls, other analysts have said that the industry’s energy consumption has been overblown. Last week, a Credit Suisse report said that although miners’ electricity usage will increase as long as the practice remains profitable, actual projections are a “far cry from the power and environmental Armageddon that some have feared.”
But, as she has on many occasions, Lagarde sought to separate the “technology that is underneath” cryptocurrency from Bitcoin itself. This technology, she has said in the past, will bring “massive disruptions,” a prediction she reiterated in the present interview.
“What is fascinating about [cryptocurrencies] is the technology that is underneath, this distributed ledger technology that guarantees identification, trustability, authentication of transactions, without intermediation, I think that was the dream of the original Bitcoin inventors,” she said, perhaps without knowledge of Bitcoin’s genesis block.
Lagarde noted that a myriad of central banks have begun to experiment with how to integrate distributed ledger technology (DLT) into their own operations, without sacrificing the authority to control and issue new units of currency.
Public cryptocurrencies, however, have another dark side beyond their massive energy consumption, Lagarde claimed.
“The anonymity of it is likely to facilitate money laundering, dark money moving around, and things that no one is happy about, if we are looking for financial stability and transparency of financial transactions, so that’s the dark side,” she said.
In response to this threat, the IMF recently called for international collaboration on regulating cryptocurrencies, joining similar entreaties from financial regulators in a variety of G20 nations.
Featured image from Shutterstock.
Last modified: May 20, 2020 9:09 PM UTC