It’s not a secret that Bitcoin has a bit of a carbon problem. The production of Bitcoin is a very harmful process that causes a huge level of carbon emissions. We have to consider that this isn’t an issue situated just within Bitcoin, as a matter of fact, many new technologies are harmful to the environment, however, as an industry we need to talk about these things, so we can work out how to rectify them.
The huge carbon footprint of Bitcoin is caused when Bitcoin is mined from the blockchain, this is because the computers uses to mine use huge amounts of computing power, which needs equally huge amounts of electricity to feed the process. This electricity tends to come from fossil fuel power stations, so in turn, Bitcoin is a part of those fossil fuel emissions. This is one of the key things that is currently stopping Bitcoin from seeing mainstream adoption, simply because the world can’t adopt something that is seen to be harmful to the planet, not now that as a society, we are becoming more conscious about our own environmental impacts by the day.
Could a form of taxation be the answer here?
If Bitcoin is adopted in the mainstream, there is always an option to tax Bitcoin holders and miners in order to fund carbon offset programmes. These sorts of programmes can fund activities away from the blockchain that give back to the planet in order to offset the damage done by Bitcoin’s carbon emissions. No, this isn’t like a good karma vs bad karma thing, this is more like admitting that Bitcoin causes environmental harm, so, why not plant a few trees to help reduce how much of that carbon is left to pollute the atmosphere.
Of course, more tax is something investors should want to avoid, it’s our investments at the end of the day right? We have to be realistic here though, if we want Bitcoin to be adopted by the mainstream, governments are going to want a slice of it too, the easiest way for them to do that is to tax it, at the very least with a carbon tax, at least we know where our money will end up. I’d rather fund new trees than government corruption at the end of the day, wouldn’t you?