A response to Mickey Kross’ article "Bitcoin Is ESG, ESG Is Not" published in Bitcoin Magazine on August 19.
I really enjoyed reading Mickey’s contrarian article on ESG and Bitcoin; he brings forward some good arguments and shows interesting data. I still disagree with his conclusion though and here is why.
Mickey raises a fundamental question: Why is it a problem if Bitcoin uses energy but not at all if Teslas use even more power? A very good point! Mickey goes on and analyzes various other so-called green techs such as wind turbines and solar panels outlining their (lesser known) environmental downsides. Until here, I am fully with Mickey: Continuing to use ever more energy and just changing its source will not save our planet.
Mickey then goes on and argues that Bitcoin’s high energy consumption reduces overall energy costs and makes green energy sources financially more attractive. But didn’t he just argue that these technologies are not that green at all? Anyway, everyone interested in energy topics knows that excess energy from nuclear power plants or solar panels, etc. poses a challenge for the grid. And utility companies need to deal with this excess energy. We can have them mine bitcoin with it and then hope that they use the proceeds from mining to reduce energy costs for the poor (as Mickey does). Then, the energy is gone.
Alternatively, we can store this energy, for example with pumped storage hydro plants: no batteries, no waste, no mining; just optimizing existing hydro plants and storing the excess energy for when we need it. The utility companies will still make a profit, so we can keep hoping that they will redistribute the proceeds to the poor… Now, what’s smarter? Bitcoin mining or pumped storage hydropower? Quite clear to me, but hey, it is a free country and for me, that is even more important than ESG, crypto, or Bitcoin.
The crucial takeaway from Mickey’s article is the following: humans have an energy problem. There are alternative energy sources but they also have their dark sides, so they are not a simple answer either. Rather, we need to save energy and use energy-efficient technologies. In Mickey’s example, do not drive a four-ton electric vehicle, rather drive a small car that only uses a fraction of its energy - or even better ride your bike or use public transportation. But the same holds true for cryptos as well! Don’t just use Bitcoin because it is like a fancy four-ton electric car that drives fast and looks cool. No, use an energy-efficient proof-of-stake blockchain that provides all the benefits Bitcoin undoubtedly has (reliability, security, social impact) but uses 100 times less energy!
Don’t get me wrong, I like Bitcoin. It was a huge breakthrough. But it also is a technology from 2009 (when Blackberry still dominated the smartphone market). Just as we insulate our homes better today than we did in 2009 to save energy and money, we should do the same with our cryptos and watch out for eco-friendly alternatives to Bitcoin, then crypto is ESG - just Bitcoin is not.
About Green Crypto Research
Green Crypto Research (GCR) is a non-profit association based in Zug, Switzerland, that specializes in evaluating the sustainability of cryptocurrencies. The organization was founded in May 2021 and developed the world's first and to date only ESG rating for cryptocurrencies. With that, GCR enables professional investors, asset managers, and crypto exchanges to offer sustainable crypto solutions to their clients.