We all make (and break) New Year resolutions. Unless you have incredible inner strength, you are like most of us. We break the difficult ones (diet, exercise, alcohol) and keep the few that are the easiest.
“Health” is defined by the World Heath Organization as “a state of complete physical, mental, and social well-being and not merely the absence of disease or infirmity.” It is your broader existence. We all feel better when we do better things, are more financially secure, and have better surroundings. So, when I say health, I speak of your planet and your pocketbook, not just your absence of disease. What can you do to accomplish such lofty goals? Simple, avoid useless and negative things, people, and habits.
But what does this have to do with cryptocurrencies? Crypto currencies are fraught by volatility, regulatory uncertainties, and scams. Few get rich. The few that create and sell them, not the vast majority of those that buy and own them. But has anyone ever discussed how damaging they are to the environment and your pocketbook?
Crypto mining uses vast amounts of water and energy. A single Bitcoin transaction consumes the electricity that a single-family home uses in 15 days. That translates to around 500 kilowatt hours. Never mind the water necessary to cool the vast computer banks required for crypto mining, the generation of 500 kilowatt hours of electricity requires 1,000 gallons of freshwater. One transaction.
Crypto mining in 2024 was estimated to require nearly 200 Terawatts of electricity. That’s 1,000,000,000 kilowatt hours. 71% of all crypto mining is concentrated in three countries: The United States (38%), China (21%) and Kazakhstan (12%). In the US, 66% of all electricity is generated by fossil fuels, in China its 77%, and in Kazakhstan, it’s 100%. That’s a lot of unnecessary emissions.
But besides the fact that crypto mining consumes vast amounts of energy and freshwater water, new demands on an aging electric grid means significant required upgrades to utilities from generating to transmission. Since electric generation is largely conducted by public utilities, in all but a few instances, those new costs are spread amongst existing users, not allocated to the new industries that necessitate the upgraded infrastructure.
The crypto miners and data center developers are subsidized by you. That’s where your pocketbook health comes into the equation.
These are the crypto industry titans that are pushing a crypto-friendly deregulatory mantra in Washington. The 2024 election saw cryptocurrency donors becoming the largest corporate donor (an estimated 238 million), surpassing oil, gas, and pharmaceutical lobbies. When that happens, it usually isn’t going to bode well for the common man who struggles to pay the utilities.
Now then, when you think of easy New Year’s resolution to keep, you might include swearing off the crypto train. That’s my New Year’s resolution (and rant), since my other resolutions of more exercise, less alcohol, and a better diet look really hard and it’s only January 4th.