Bitcoin Smear Campaigns Continue & Tether Fear Dies Down

This week, several mainstream media outlets reported a new study on the electrical consumption of Bitcoin. The study stated that “Bitcoin alone could push global temperatures over the 2ºC catastrophic threshold by 2034.” Forbes even released an article titled, Bitcoin Predicted To Be The Nail In The Coffin Of Climate Change. This is not the first time Bitcoin has been criticized for its consumption of electricity. In fact, this topic has been highly debated for years. Some Reddit users argued that the release of this study was orchestrated propaganda because all of the articles were released within a few hours of one another. Also, they were all similarly written, which led some to think the articles were prewritten. When a new study is published, a majority of mainstream media outlets will typically rush to publish something similar. Therefore, this is most likely not an example of orchestrated propaganda.

However, Bitcoin enthusiasts are not crazy for suspecting a possible smear campaign against crypto. For example, last year the Polish Central Bank was caught secretly funding anti-crypto YouTube channels. If Bitcoin is irrelevant and not a threat to traditional banking, why waste taxpayer money funding a smear campaign against it?

Although it is unfortunate Bitcoin consumes a significant amount of electricity, it is outlandish to think Bitcoin will lead to the end of the world by 2034. In the 1990s, many people thought the internet would lead to a longterm electrical consumption problem. However, this never happened. Jonathan Koomey, a Stanford University lecturer who pioneered studies of electricity usage, explained how most technologies scale overtime to become electronically efficient,

‘“I would not bet anything on the bitcoin thing driving total electricity demand. It is a tiny, tiny part of all data center electricity use. This kind of analysis makes a classic mistake: It projects high growth rates associated with a new technology into the future, resulting in an eye-popping demand forecast. Similar projections were made about internet data traffic and electricity usage from office computers and mobile devices. Sure enough, their initial growth rates moderated as they scaled up.”

Although Bitcoin mining consumes a significant amount of electricity, it is not that much when compared to the costs of gold mining and printing money. Here’s how Bitcoin’s carbon footprint compares to other industries:

Gold Mining: 475 million GJ (of energy used per year), 54 million tonnes (of CO2 produced)

Gold Recycling: 25 million GJ, 4 million tonnes

Paper Currency and Minting: 39.6 million GJ, 6.7 million tonnes

Banking System: 240 million GJ, 390 million tonnes

Bitcoin Mining: 3.6 million GJ, 0.6 million tonnes

The recent controversy around Tether has also made the cryptocurrency markets more fragile to manipulation. 2018 has been the year of the stable coin. More than 50 stable coin projects have now launched and they all wish to take market share away from Tether, the world’s largest stable coin.

As many like to think, ‘be greedy when others are fearful and fearful when others are greedy.’ However, this motto is easier said than done. There was a scare campaign against Tether earlier in the month. Many people received a fake email from Binance Exchange stating that they were delisting Tether because it was a ‘big scam’. While the rest of the market began panic selling, there were a few individuals buying Tether when the price was 90 cents. Regardless of whether Tether is solvent, markets behave irrationally then they calm down. This is precisely what happened with Tether. We still do not know whether Tether is solvent, yet the market has forgotten and the price of Tether is back at $0.99. A cool profit for those who derived greed in the face of fear.

When the entire market is acting irrationally, sometimes doing the opposite of the collective majority is the best alternative. These situations will continue to be common as the space matures, namely because average people have been told to fear cryptocurrencies due to scams, criminals, etc. As a result, the cryptocurrency market is filled with fearful & paranoid retail investors. Many early investors remember losing money in Mt. Gox or BitConnect, so they act with prudence. Above all, it is important to distinguish between a potentially catastrophic event and a short term scare campaign.

Disclaimer: I am not a financial advisor. This is not financial advice. Please do your research independently and make objective decisions. This article is intended to educate readers on the recent state of the Cryptocurrency market. The author of the article owns cryptocurrency.