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Is Bitcoin Accelerating Our Global Warming?

The Bitcoin is by far the most popular cryptocurrency in the world. Cryptocurrencies were primarily designed to facilitate faster and more secure financial transactions over the web. They were meant to make the world a better place. However, there are worrying studies that show that the rise of Bitcoin alone could increase the world’s global…

The Bitcoin is by far the most popular cryptocurrency in the world. Cryptocurrencies were primarily designed to facilitate faster and more secure financial transactions over the web. They were meant to make the world a better place. However, there are worrying studies that show that the rise of Bitcoin alone could increase the world’s global warming levels by two degrees in a span of just 2 decades.

This is because this increase in the use of Bitcoin places huge demands on the world’s energy system. As a result, astronomical amounts of carbon emissions are given off, which consequently cause a global warming effect. It is inevitable that the continued growth of Bitcoin would lead to a two-degree increase in global warming, which is definitely not good news for the environment.

Where do Bitcoins come from?

Put simply, Bitcoins are born when people mine them online with their computers. They are very expensive to produce. Computers mine Bitcoins by solving complex math equations, and by doing so they suck up a lot of electricity. The amount of electricity used to mine a single Bitcoin is relatively equivalent to the amount of power a single house uses for months. Plus, Bitcoins can only be 21 million in total meaning it takes a lot of time and energy to produce just a single unit.

Scientists have done a comparison of the number of emissions by mining computers to that of transportation, housing, and food, which are considered the main contributors to climate change. It has been determined that cryptocurrency mining produces enough emissions to warrant inclusion to the list.

Because the Bitcoin business is volatile, predicting its future is tricky. No one can tell where its value will stand at a few years from now. It has also become so competitive now that sometimes, the amount of money it takes to produce it is more than its actual value.

The more difficult the equation a computer solves, the more energy it uses. For this reason, the value of a Bitcoin could increase over time as equations become more complex. However, things could also take an opposite twist when mining technology improves in efficiency in the future resulting in lower prices and less energy consumption.

How it accelerates Global Warming.

Since more complicated equations consume more energy, with the increasing complexity of Bitcoin equations, more energy is being spent to produce fewer coins. As more and more computing power is delegated to Bitcoin mining, the energy being released compounds upon itself, accelerating the effects of global warming.

Many crypto companies and blockchain based organizations are looking into this environmental issue with an intention of coming up with a solution. They want to develop a way of sustainable supply chains and decarbonizing energy systems. This has proven to be a hard task since the potential energy uptake and carbon emissions given off from mining bitcoins are directly against the vision of the technology.

Is there a solution to this Bitcoin issue?

So far, only speculations have arisen. It is dangerous to assume that bitcoin mining will be significantly more efficient in the future. It is a 50:50 scenario because no one really can tell how much more powerful computers of the next decade will be, and if they will be able to handle the equations much faster. Therefore, achieving this speculated efficiency is something that may or may not happen, and that puts all of us in a dangerous position.

One of the main proposal being put forward is the regulation of crypto mining throughout the world. Yes, cryptocurrency is untraceable, but governments should take charge and regulate mining them because of their high energy demands- says Day Translations

Another solution being proposed is currency-based. The fact that bitcoin is costly in terms of the computing power and work needed for running is what makes it undefeated. An obvious solution, therefore, is to keep improving the existing protocol to further improve efficiencies.

And everyday innovators are taking up this task to do just that. Plus, computer chips also continue to advance by the day, improving the efficiency of computation in relation to power intake. However, the main downside of this approach is as long as there is money to be made, more miners will continue flocking the Bitcoin scene and in return, more power will be consumed just as before.

Other cryptocurrencies and blockchain platforms have also experimented with alternative protocols which consume way less energy. Such algorithms could potentially eliminate the energy consuming process of mining while at the same time recording transactions. The fact that a number of brilliant minds in the industry have realized the problem and are actively working on such algorithms shows a bright future.

Final Thoughts

Bitcoin is not the only crypto out in the world today. It is just the most popular one when compared to the rest. There are plenty of more crypto types that require far less energy and less complex equations to solve. In its current state, Bitcoin mining is slowly but surely proving harmful to the environment. If the trend continues, and if a solution is not found soon, the effects will start to be felt within as little as a decade. All stakeholders should strive to come up with solutions that will help mitigate the overall accelerating effects that Bitcoin mining is having on global warming.

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Traders are piling into bitcoin as a haven against volatile markets. This researcher warns they could get burned.

Dan Kitwood/Getty Images Bitcoin isn’t a ‘unique’ hedge as it’s vulnerable to the same market risks as conventional investments, according to a new study. It becomes more exposed to factors such as inflation expectations when its price is less volatile, the researcher found. The findings are a “cautionary note” for investors, writes author Dimitrios Koutmos,…

Traders are piling into bitcoin as a haven against volatile markets. This researcher warns they could get burned.

hedge mazeDan Kitwood/Getty Images

  • Bitcoin isn’t a ‘unique’ hedge as it’s vulnerable to the same market risks as conventional investments, according to a new study.
  • It becomes more exposed to factors such as inflation expectations when its price is less volatile, the researcher found.
  • The findings are a “cautionary note” for investors, writes author Dimitrios Koutmos, as they suggest bitcoin isn’t “a unique asset class whose price behavior is detached from economic fundamentals.”
  • Watch bitcoin trade live.

An escalating US-China trade war, the slowing Chinese economy, and a prolonged Brexit process have fueled anxiety in financial markets, boosting investors’ interest in bitcoin as a hedge against volatility.

However, new research suggests the cryptocurrency may have limited value as a hedge as it’s vulnerable to the same factors that move the prices of stocks and other mainstream investments. While it escapes some of those drivers when its price is especially volatile, the increased risk may outweigh the greater returns.

“Bitcoin prices, despite their seemingly attractive independent behavior relative to economic variables, may still be exposed to the same types of market risks which afflict the performance of conventional financial assets,” wrote Dimitrios Koutmos, an assistant professor of finance and technology at Worcester Polytechnic Institute in Massachusetts, in a study titled “Market risk and bitcoin returns” published online in the Annals of Operations Research this month. 

Koutmos used treasury bill rates, the VIX and Deutsche Bank FX volatility indexes, treasury yields, forward inflation swap rates, equity indexes, and the difference between corporate bond yields and treasury yields as proxies for short-term interest rates, market-volatility expectations, and other factors that affect traditional financial assets. He examined their influence on daily bitcoin prices between January 2013 and September 2017.

His key finding was that several of these factors were “important determinants of bitcoin returns.” Specifically, short-term interest rates and investors’ expectations of stock-market and foreign-exchange volatility were significant determinants of the price of bitcoin during periods when it rose or fell sharply. Those three factors, along with general economic conditions and inflation expectations, influenced the price of bitcoin when the cryptocurrency was less volatile, according to the study.

The findings serve as a “cautionary note” for investors, Koutmos wrote, as they suggest bitcoin isn’t “a unique asset class whose price behavior is detached from economic fundamentals.”

They also indicate “bitcoin’s usefulness as a diversification instrument is time-dependent,” given the cryptocurrency was more susceptible to factors such as inflation expectations during periods when its price was less volatile. 

If bitcoin truly is a better hedge when its price is moving around, investors who bought into bitcoin’s price surge this month as a hedge against the sharp downturn in stocks might be feeling pretty smug. However, Koutmos also found that bitcoin’s superior returns during periods of high volatility weren’t high enough to offset the increased risk, meaning its returns during low-volatility periods were higher on a risk-adjusted basis. 

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‘Bitcoin Will Disappear,’ Craig Wright Rants in Blistering ‘Satoshi’ Manifesto

‘Bitcoin Will Disappear,’ Craig Wright Rants in Blistering ‘Satoshi’ Manifesto

‘Bitcoin Will Disappear,’ Craig Wright Rants in Blistering ‘Satoshi’ ManifestoSelf-proclaimed “Satoshi Nakamoto” Craig Wright published a blistering manifesto that predicted Bitcoin would disappear in “moments.” | Source: Crypto Strategies/YouTube (i), Shutterstock (ii). Image Edited by CCN.By CCN: Australian entrepreneur Craig Wright published a blistering manifesto that argues bitcoin (BTC) will eventually disappear because it’s being used to facilitate criminal activity. And that perverts his original vision for the cryptocurrency.For reference, Wright has repeatedly claimed that he is Satoshi Nakamoto, the mysterious creator of bitcoin. He has yet to offer definitive proof.Civil War Erupts Between Warring Crypto FactionsWright is a proponent of Bitcoin SV (Satoshi’s Vision), which he insists is the “true bitcoin.”Wright and his ally Calvin Ayre claim BSV will supplant all other fake pretenders to the bitcoin throne and will crush rivals BTC and Bitcoin Cash (BCH) into the ground.Bitcoin Price Will Crash to Zero Says Bitcoin Cash Founder Calvin Ayre https://t.co/34ZrOZVJhu— CCN.com (@CCNMarkets) December 17, 2018‘Bitcoin Needs to Act Within the Rules’In a withering manifesto, Wright claims he created bitcoin to operate within the law and not to facilitate criminal activity like money-laundering.Wright then torched cryptocurrency evangelists who claim BTC is totally decentralized and therefore doesn’t need to play by any rules. However, Wright says they’re deluding themselves and need to be slapped awake.“I designed Bitcoin to be a system that worked within the rules.”“Bitcoin needs to act within the rules. If it does not, then the exchanges and systems that allow people to use Bitcoin act to stop it being widely used and disseminated and criminalise all of those in the system.”“If Bitcoin or any other monetary system seeks to act outside the rules, it becomes an outlaw system, and once it does, it is easy to stop.”“The majority of people want rules. They don’t want to fight in a world of uncertainty, and want to know that the contract that they have conducted will remain valid not just now, but throughout the term of the exchange — for which we need rules.”Craig Wright, the self-proclaimed inventor of bitcoin, says BSV will supplant BTC in due time.Craig Wright: Binance Facilitates CrimeMoreover, Wright insists that cryptocurrency exchanges are basically criminal enterprises that “facilitate money laundering.” Accordingly, he predicts that they will eventually go out of business “because crime will always fail.”Specifically, Wright accused Binance and Bitfinex of lying to their customers when they claim to be decentralized. He says they’re not. Wright also explained that the only reason why anyone wants a decentralized financial platform is so they can use it to hide or launder money.“Groups such as Binance who seek to facilitate money laundering and crime will always fail. They defraud you in telling you that they are decentralised and cannot be controlled.“Bitcoin is a system that was set in stone. If the protocol is changed, then it shows and demonstrates it is not Bitcoin. When those involved altered the rules, they impacted their entire ecosystem — it is a centralised power structure. They defraud you when they lie about decentralisation and tell you that they have no ability to change things but then alter the rules.”“When those in power are able to change the protocol, they can change the lives and the finances of those involved in the system at an arbitrary whim. It is why BTC is not Bitcoin.”Wright: Bitcoin ‘Will Disappear In Moments’Wright further claimed that because bitcoin has been manipulated, it will eventually disappear. And when that happens, he warned that it’ll vanish instantly.“Where a blockchain does not follow the rules…it is simple for government to stop. When the action happens, as it did with e-gold, everything invested in the system will vanish in a flash. When BTC disappears, it will not disappear slowly, it will disappear in moments.”Wright then concluded by promising that he’ll sign a Satoshi transaction after “I have definitively proven I created Bitcoin. Not before.” About The AuthorSamantha ChangSamantha Chang is a financial editor who writes about politics at BizPac Review, about business at CCN, and general news at HVY. She is a law school graduate and an alum of the University of Pennsylvania who enjoys finance, flowers, and fitness. You can find her on Twitter at Samantha_Chang.This article was edited by Josiah Wilmoth.
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