Category: BTCUSDT

We’re all familiar with the concept of organic vs. non-organic food, but Shark Tank’s Kevin O’Leary sees a similar distinction being applied to Bitcoin. He predicts the divergence of Bitcoin into two classes, the clean “virgin” coin mined using renewable energy in “whitelisted” countries, and, in reference to the diamond trade, what he calls “blood coins.”

O’Leary had previously called Bitcoin garbage and worthless. His reasoning, back then, was the inability to buy goods and services with it.

O’Leary Will Only Buy Clean Bitcoin

Speaking to CNBC, O’Leary said he would only purchase sustainably produced Bitcoin and never “blood coins” from China. He added that this contrast would become more apparent in the next year or two, forming distinct markets in the process.

“I’m not buying coin unless I know where it was mined, when it was mined, the provenance of it. Not in China. No blood coin for me.”

The Canadian entrepreneur said investors increasingly want to know where their investments are sourced. As the Chair of O’Shares ETFs, O’Leary mentioned that institutional investors had inundated him with queries asking if he was buying “blood coins” from China.

More and more, institutions impose restrictions on the assets they hold to comply with environmental and corporate governance rules. Issues to do with human rights and environmental damage get the thumbs down. He also said “made in China” is increasingly becoming shunned.

“institutions will not buy [BTC] mined in China, coins that have been mined using coal to burn for electricity, or coins mined in countries with sanctions on them.”

U.S.-China Trade War Still On-Going

Talk of a U.S.-China trade war was prominent a year or so ago. Flashpoints included the arrest of Meng Wanzhou, the daughter of Huawei’s founder, on Canadian soil at the request of the U.S., And the trade ban restricting U.S. firms from dealing with the Chinese, in particular tech and chip companies.

While these stories have faded in recent times, O’Leary claims the trade war between the U.S. and China continues. He calls for more aggressive action against China to “level the playing field.” His suggestions include delisting Chinese stocks and restricting access to U.S. legal system.

O’Leary maintains that this is how U.S. firms are dealt with in China. He added that even as a manufacturer in China, he could not sell into the Chinese market.

“I can’t sell my product there, and yet they enjoy those benefits in North America and in Europe.”

The World Bank ranks China 31st out of 190 countries for ease of doing business. While the U.S. takes 6th place in the same report.

Many foreign companies persevere in accessing the lucrative Chinese market. In some cases, the Chinese government requires a partnership or joint venture with a Chinese firm to do business in China.

Source: BTCUSD on TradingView.com

Ripple CEO Brad Garlinghouse said performing a single Bitcoin transaction requires burning 75 gallons of gasoline. This shocking statistic gives a degree of the scale of Bitcoin’s possible environmental impact.

Bitcoin Gets a Thumbs Down From Environmentalists

It emerged recently that Bitcoin’s annual energy consumption currently matches that of a mid-sized country, with Argentina given as an example.

Garlinghouse said Bitcoin’s proof-of-work consensus model ensures the problem will get worse as the network grows. This is because rising price correlates positively with energy consumption, as more miners join the network to take advantage.

“As the price of Bitcoin goes up the energy consumption and the carbon footprint of a proof-of-work, that mining that happens to validate the transactions, that continues to scale aggressively also. And we can’t lose sight that one Bitcoin transaction is about the equivalent of 75 gallons of gasoline being burned.”

Charles Hoskinson, the CEO of IOHK, said the amount of energy used by the BTC network has gone up more than four times since the peak of the last bull market.

“Bitcoin’s energy consumption has more than quadrupled since the beginning of its last peak in 2017 and it is set to get worse because energy inefficiency is built into bitcoin’s DNA.”

And with the price of Bitcoin predicted to go up further during this bull cycle, future energy consumption will inevitably rise to that of a large country. Estimates put a $100k Bitcoin on par with the energy consumption of France or Germany.

What’s The Solution?

There are no easy answers to this issue. But Garlinghouse suggested users switch to more energy-efficient platforms, such as Ripple and XRP, especially for payment transactions.

“We at Ripple use the XRP Ledger because it’s extremely fast and it’s about one hundred thousand times more energy-efficient than Bitcoin. In that context, it works really well for payments…”

At the same time, Bitcoin advocates say high energy consumption is not a valid argument as most of the energy comes from renewable sources.

Head of Research at CoinShares Christopher Bendiksen states that Bitcoin mining is a mobile affair drawn to unwanted and cheap energy sources. He claims the majority source comes from otherwise underutilized renewables.

“Bitcoin mining is extremely competitive, but even more importantly, mobile, and therefore tends to cluster around the unwanted (read: cheapest) energy sources of the world. These sources happen to be largely composed of stranded or otherwise underutilised renewables, particularly hydro power.”

What’s more, Bendiksen goes as far as to say the electricity cost is worth it for what we get in return – a global apolitical monetary system. Rather than condemn Bitcoin’s energy usage, he argues that Bitcoin mining has an important role to play in improving the renewable grid architecture.

Source: BTCUSD on TradingView.com

Bitcoin is often slammed over its high electricity consumption. Critics argue this is wasteful and unsustainable in the long term. However, in an unusual twist to the environmental debate, it turns out that fracking companies are utilizing waste gas to power Bitcoin mining rigs.

Bitcoin Mops up Waste Gas

The shale industry is in a state of decline. Not only are political, financial, and environmental issues closing in, but the effects of the pandemic have also taken their toll.

With that, turning to alternative revenue streams has become all the more appealing in recent times. Sergii Gerasymovych, the Founder of EZ Blockchain, spotted an opportunity to bring Bitcoin and the fracking industry together.

Fracking shale formations involve digging into the earth before a high-pressure water mixture is directed at rocks to release the gas held within. Waste gas, mostly composed of methane, is also released as a byproduct of this process. This flare gas is typically burnt off as it’s unprofitable to sell.

“Gas flaring is responsible for at least 1% of global carbon emissions, and collectively wastes hundreds of millions of dollars worth of natural resources every year.”

However, Gerasymovych realized that Bitcoin miners and shale companies could both benefit from utilizing the flare gas. Instead of burning it, Gerasymovych proposed using generators to convert the flare emissions into electricity. In turn, this is then used to power Bitcoin mining equipment.

Previously, shale companies were skeptical of this idea. But a combination of factors came together this past year or so, making the idea much more appealing. As the pandemic struck, the price of gas fell. At the same time, the value of Bitcoin has skyrocketed.

But what swayed things was Gerasymovych’s business model, which charges for installing and maintaining the Bitcoin infrastructure. This setup means the fracking firm is the Bitcoin miner using its own waste gas for free.

“The market conditions have changed. Now, every oil and gas company we reached out to in 2018 is calling us back because they see Bitcoin is making a lot of money.”

Energy FUD

Researchers estimate the Bitcoin network uses 121.26 terawatt-hours per year, which is equivalent to the energy consumption of a mid-sized country such as Argentina.

The critics argue that burning fossil fuels to power the Bitcoin network accelerates climate change. However, Bitcoin mining is a highly competitive industry. Those with the most efficient mining rigs powered by the cheapest electricity will rise to the top.

It just so happens that renewable hydropower is the cheapest electricity source available, at an average cost of $0.05 per kilowatt-hour. For comparison, fossil fuels can cost more than three times as much at $0.17 per kilowatt-hour. Using waste gas that would otherwise be burned is even better.

However, some maintain the view that it’s hard to justify Bitcoin’s massive energy consumption regardless of the energy source.

Source: BTCUSD on TradingView.com