Mark Tencaten | Does the cryptocurrency you want to invest in meet the ESG requirements?

On October 31, Bitcoin, the pioneer digital currency, turned 13. Since Satoshi Nakamoto, the anonymous creator of the bitcoin white paper, developed the digital currency built on blockchain technology, cryptocurrency has advanced significantly. Just several years back, cryptocurrency was mainly a tech-geek obsession. Today, however, it has succeeded in igniting a genuine interest among major institutional investors and businesses like Tesla and Microsoft. Additionally, crypto exchanges have made it simple for ordinary people to trade cryptocurrency. The path has been nothing but precarious despite its popularity.

Progress has been hampered by recurring FUD (Fear, Uncertainty, and Doubt) cast around cryptocurrency's future. And the ESG (Environmental, Social, and Governance) impact is the most recent issue being raised by nations like China, which outlawed bitcoin mining.

But Mark Tencaten asks whether these worries are valid. You will be guided through the actual effects of cryptocurrencies, particularly Bitcoin, on our society and the environment by Mark Tencaten.

Does Bitcoin have a future?

According to one estimate from the Cambridge Bitcoin Electricity Consumption Index, bitcoin miners used roughly as much energy per year as a tiny nation like the Netherlands in 2019. You've probably seen this statistic brought up online in relation to Bitcoin criticism. However, this is only part of the whole picture.

Mark Tencaten answers that bitcoin uses a significant amount of energy. However, it is not mentioned that bitcoin is just as environmentally friendly as its source of energy. Bitcoin may also be mined with 100% non-fossil fuel-based energy, just as electric vehicles. According to a recent analysis by the Bitcoin Mining Council, 56% of the energy used in bitcoin mining throughout the world comes from renewable sources.

Furthermore, the energy is wisely invested in technology that is at the vanguard of transforming the entire world's financial system. Bitcoin is significantly more environmentally benign than the traditional gold mining industry or the financial services industry it intends to replace.

Additionally, Bitcoin aids in resolving a significant issue in the energy sector: periodically increased production of renewable energy that is wasted because of storage problems. Unlike typical users, mining farms can be shifted to the source of energy generation. For instance, Texas is an excellent place for miners since it produces a lot of solar and wind energy.

Bitcoin can absorb 400 metric tonnes of the carbon dioxide created annually during oil extraction, which is frightening, but it can also assist lower emissions. The residue of oil production known as dry natural gas, which was formerly burned on-site, is now used by bitcoin mining farms installed next to oil refineries.

There are "proof of stake" cryptocurrencies, which do not rely on a mining process that consumes a lot of energy. Popular greener alternatives to Bitcoin include Cardano (ADA), Nano (NANO), Ripple (XRP), and Solana (SOL), among others. 

Is Bitcoin used by criminals and those who launder money?

Bitcoin being used for illicit operations; hence "is it bad?" is the most often asked question in a section on governance and cryptocurrency.

Elliptic, a blockchain analytics company, claims that less than 1% of all bitcoin transactions were related to illegal behavior (such as black markets, ransomware, and fraud). Because Bitcoin is transparent, all transactions, including illicit ones, can be tracked.

Like the internet, bitcoin is impartial and has qualities that are advantageous to both positive and negative individuals. However, the percentage of illegal transactions will decline as technology develops and is more widely used. Anyhow, the scale of unlawful conduct using conventional financial institutions is nothing compared to the insignificant amounts on the blockchain.

Conclusion

Cryptocurrency compliance with ESG standards is a well-established issue. Chainalysis estimates that during the third quarter of 2019, the adoption of cryptocurrencies has increased globally by a whopping 2300%, with developing nations like Vietnam and India leading the charge. 

Because cryptocurrency is a once-in-a-lifetime trading prospect built on cutting-edge technology, ignoring it because of partial truths is like failing to see the forest for the trees.