🤔 Bitcoin or gold, which one is better (1/3)
Looking at the environmental impact 🌱 and the financial returns 📈
We are kicking off a “This or that?” series to help you get unstuck in those common dilemmas.
First on the list is a 3 part series about…🥁🥁🥁
Investing in Bitcoin or Gold …Trendy and timely 😎
Why now?
🐯 Bitcoin is on fire and getting every week new highs (+266% in the last 6 months).
🐢 On the other hand Gold is getting lower by the day (-10% in the last 6 months).
Part 1/3: Bitcoin
🌱 About environmental impact
Bitcoin requires a huuuuge amount of energy to run through the servers and making it available for people to buy, transact or store.
⚡️ The energy consumption is around 77 terawatt-hours (TWh) per year, comparable to the power consumption of Chile 🇨🇱 ~19M people.
🗑 The annualised electronic waste is 10.80 KT, comparable to the e-waste generation of Luxembourg ~625k people 🇱🇺.
🏭 The annualised carbon footprint is 36.95 Mt CO2, comparable to the carbon footprint of New Zealand ~5M people 🇳🇿.
Two-thirds of bitcoin production is done out of China. More than half of China’s energy output comes from coal, so the bitcoin production is likely to be particularly dirty, for now (China is promising carbon-neutral by 2060)
😱
For something dematerialised that hold no intrinsic value, that's a pretty big impact. And that's just the beginning. We don't see the bitcoin and other cryptocurrencies (and the blockchain technology) stopping or slowing down, quite the opposite in fact.
Okay, but for the energy, we can go fossil-free right?
Yes, we can! it will be up to 3 parties: governments regulations, cost of energy and tech innovation.
🤔 What if governments start to tax the bitcoins miners depending on their sustainability, it could help to get in the right direction, isn’t it? It is wishful thinking for now but who knows… USA and China are now pretty keen on getting carbon neutral, so it's not totally out of the question. What you can do is to vote for your representatives who care about the environment and have policies to reduce fossil fuel energy production 🟢.
🤔 What if the servers could run all the time on 100% renewable?
Doable, but not easy.
There are some claims from Google and Microsoft that all their data processed have zero net carbon emissions.
They are going in the right direction, but use a trick for the claim.
They do their carbon accounting on an annual, global basis. At the end of a year, the company tallies up its energy use and renewable energy purchases and makes sure they’re equal. They do invest a lot to get clean energy for their data server as well as optimising the resources required. So thumbs up for that 👍.
However, they are both heavily investing in new tech to be 100% renewable, all the time ––not just when the sun is shining or the wind is blowing. Some serious projects about installing undersea servers in Scotland.
On that note, Amazon Web Services (the cloud entity), the major player in this industry, is not really doing anything and is quite opaque about it 👎
In terms of tech innovation that could help, we can count on new blockchains (the infrastructure behind Bitcoin) less energy-intensive. For example, new versions of Ethereum are using Proof of Stake protocols which could dramatically improve energy efficiency. We could expect Bitcoin to follow.
In conclusion, there are options and ways to make it more carbon-neutral, but we’re not there yet. However, the future is looking bright and full of possibilities ☀️.
👀 What do they look like?
So how do they look like those server farms which are mining Bitcoins and other cryptos?
Click on the images for the original article.
Both are real pictures of different types of server farms.
There will be a lot of different ones with different styles and different impact on the environment. It all depends on countries and regulations..but not only!
For example, the picture with the containers is actually based in the USA, Washington state 🤪.
Because of the nature of decentralisation of the blockchain, e.g. the tech that runs bitcoins, it is actually possible for anyone to mine some crypto in their own home with their computer. It is not very profitable, but anyone could do it.
So the picture of Bitcoins miners is very diverse and goes from clean and new-tech warehouses to artisanal hidden containers.
💰 What about returns?
This is easy and pretty straight forward when looking at the past.
☝️ We are only looking at past performance and can’t predict about the future 🔮
At the moment, Bitcoin is on 🔥🔥🔥 and the trend is really going up 📈. Everyone talks about it and is buying some.
Lately, Electric vehicle manufacturer Tesla has invested $1.5 billion 😶 into Bitcoin for diversification and cash investments. The news sent Bitcoin's price surging.
Here’s the historical summary:
Mean annual return: 408.8%
Minimum annual return: -72.6%
Maximum annual return: 1318.0%
Here’s a graph ($US)
Yes, Bitcoin is up, seems to keep going up and does not have any signs of going down significantly over the long term.
It is quite possible that it will go through several lumps and bumps. It is a very volatile investment. It took nearly 3 years for bitcoin to recover from the “crypto-correction” in 2018.
Bitcoin is high-return, high-risk, particularly for short term period. Trade with caution.
Next up is Gold⚜️. Read it here.
✌️
Marc @Manyana.world
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Sources
https://digiconomist.net/bitcoin-energy-consumption/
https://www.wired.com/story/amazon-google-microsoft-green-clouds-and-hyperscale-data-centers/
This list the kWh cost of bitcoins from the first one until the most recent one mined.
1 - 0.00016 kWh
10,000th -533,333 kWh
1,000,000th -1,066,667 kWh
5,000,000th - 3,200,000 kWh
10,000,000th - 5,866,667 kWh
15,000,000th - 7,333,000 kWh
19.9 million (most recent)~8,700,000-9,000,000 kWh
And although Bitcoin mining is scheduled to continue to 2140 most of the bitcoins have already been mined. The cap is 21 million.