Home Pastor Ife Let’s talk aboutCRYPTOCURRENCY Part 2

Let’s talk aboutCRYPTOCURRENCY Part 2

Let’s talk aboutCRYPTOCURRENCY Part 2

In part one, I explained how crypto works. I talked about why it may go up and why it may come down as it is currently. I explained that if it will blossom, there are three ways to do it. The first is Government Policy. I explained that if countries approve it as a legal tender, it will become gold for the holders. But so far, more countries are banning it, some zoned it under some financial regulations but none have adopted it fully except for El-Salvador. In the first part, I also mentioned the reason why governments are reluctant to adopt it and the unlikely prospect. You can read it up here-

In this second part, let’s talk about how big-wig private investors can influence the status of crypto which is the second option crypto has to survive and be sustained according to my analysis.

Early this year, crypto was on the rise, why? Elon Musk, the 2nd richest man in the world and CEO of Tesla company said his company would accept crypto for the purchase of electric cars. That news alone gave crypto a boost. Other smaller companies, as expected, started investing in it. A few months later, Elon said they would no longer accept crypto and those who have used it to book for electric cars will have their order cancelled. With that news, crypto fell and it’s yet to be back on its feet.

The value of any currency is in its purchasing power. If crypto can be used to buy things in the mainstream market, its value would be on the rise and it is only private companies owners that can drive this since governments are not adopting it for use.

But why are investors reluctant about it? I believe a part of them is concerned about governments but Elon Musk said it was because of the power consumption involved in mining crypto and the e-waste it generates. As an environmentalist who wants to reverse climate change, he felt he has a moral obligation to back out from the promotion of crypto. That leads us to the question, what does the mining of crypto mean?

Mining as we know is the process of extracting natural resources such as gold, coal and the rest from the earth. In the case of crypto, miners are those who process the buying and selling- transaction of crypto through complex computations. They are spread all across the nations of the earth and they are paid in crypto. But how does mining consume power? How does it affect the climate?

Investopedia reported that bitcoin alone uses 121-Terrawatt hours of electricity in a year more than what Argentina as a whole uses in a year. Digiconomist also said that Ethereum consumes as much power as used by the whole nation of Qatar in a year. The power they consume is not the problem but the source. Researchers at the University of Cambridge reported that 65% of miners are based in China, a country that generates most of its power through the burning of coal and fossil fuels. This, of course, has a serious implication on the climate. Bitcoin alone generates 35.95 million tons of carbon dioxide (fumes) in a year, the same as what the whole of New Zealand generates in a year.

Secondly, the special device they use alongside the computers cannot be reused and they soon become obsolete. This amounts to the generation of electronic wastes which are harmful to the environment. According to Digiconomist, bitcoin alone generates 8-12 thousand tons of e-waste in a year. The complicated aspect is that the higher the price, the higher the consumption of power and generation of wastes.

The world is currently working on an extreme reduction in the emissions of carbon dioxide as well as the generation of wastes that cause climate change and are harmful to the environment. Elon Musk believes he has an obligation to sustain this because he’s into battery making and electric cars which helps to produce a healthy environment.

While I assume that, the reasons Elon cited were mere excuses, crypto networks have also claimed that most miners are not using unrenewable energy sources but renewables such as hydroelectricity and solar. Some crypto are also working towards the total elimination of mining. If that is widely adopted and effective, maybe it could boost the confidence of private company owners especially the big boys.

Talking about the big boys, recently, crypto stopped dropping- do you know why? Two major things: Jack Dorsey, the CEO of Twitter and lover of crypto held a discussion with Elon Musk. In the debate or discussion, Elon mentioned that his company still has an investment in crypto worth millions of dollars and that they may soon resume accepting crypto for their products. The second factor is the rumour that Jeff Bezos, the founder of Amazon and the richest man in the world is contemplating accepting crypto.

Those two events boost public confidence in crypto even though I am of the opinion that the rumour is actually false. But let’s assume it’s true for a second.

Amazon is the biggest e-market in the world. It runs just like Jumia or let me say, Jumia runs just like it. If it accepts crypto, that will increase the purchasing power of crypto. More investors will follow suit and that will mean wealth for crypto owners. I really wish this would happen and nothing is impossible but bear in mind that private investors are in any business to make themselves richer and not to make you richer. If the odds favour them perfectly, they will do it.

The third force that could make crypto increase in value is public acceptance. Allow me to explain how this works in the third article. I may also explain the introduction of new cryptocurrencies owned by countries and investors which are meant to compete with the existing ones.

Information and statistics quoted are based on what obtains at the moment of writing the article.

Ife Adetona
©August 2021


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