The trick to discrediting a new idea or technology is crafting a criticism onto which supporters or people at least open to the idea or technology will latch. A lot of effort has gone into discrediting cryptocurrencies, but most of them have fallen flat because they haven’t spoken to supporters or people open to the idea of cryptocurrencies. However, what I will call the energy scare seems to be gaining some traction. A short while back Mozilla announced that it would stop accepting proof-of-work cryptocurrencies ostensibly for environmental reasons. Now Wikimedia has made a similar announcement:
Wikimedia, the non-profit foundation that runs Wikipedia, has decided to stop accepting cryptocurrency donations following a three-month debate in which the environmental impact of bitcoin (BTC) was a major discussion point.
I’ve previously touched on the energy use of Bitcoin and how it compares to the US dollar. However, since the topic is being brought up again, I feel the need to make some more criticisms of the current critics of Bitcoin.
Mozilla and Wikimedia may not accept your Bitcoin, but both will happily accept your United States dollars. This is baffling because both organizations cite environmental reasons for not accepting Bitcoin, but the United States military is one of the largest polluters in the world:
Research by social scientists from Durham University and Lancaster University shows the US military is one of the largest climate polluters in history, consuming more liquid fuels and emitting more CO2e (carbon-dioxide equivalent) than most countries.
Why does this matter? Because one cannot claim to oppose Bitcoin for environmental reasons while also not opposing United States dollars for the same reasons. The United States dollar is inseparable from the United States military because the latter is necessary to maintain the value of the former:
The world relies on the U.S. dollar and U.S. treasuries, giving America unparalleled and outsized economic dominance. Nearly 90% of international currency transactions are in dollars, 60% of foreign exchange reserves are held in dollars and almost 40% of the world’s debt is issued in dollars, even though the U.S. only accounts for around 20% of global GDP. This special status that the dollar enjoys was born in the 1970s through a military pact between America and Saudi Arabia, leading the world to price oil in dollars and stockpile U.S. debt. As we emerge from the 2020 pandemic and financial crisis, American elites continue to enjoy the exorbitant privilege of issuing the ultimate monetary good and numéraire for energy and finance.
The dollar is backed by one thing: military might. Its value cannot be separated from the United States military anymore than Bitcoin’s value can be separated from the energy usage of its miners. Bitcoin’s current contribution to global pollution is a tiny fraction of the current contribution of the United States military. Therefore, if an organization wants to encourage the use of more environmentally friendly currencies, it would dump the dollar before Bitcoin.
But the here and now isn’t the only consideration. Let’s consider the future. Bitcoin miners have been transitioning towards renewable energy for quite some time. The United States military on the other hand has made no efforts towards doing the same. While Bitcoin miners are already working to become more environmentally friendly, the Commander and Chief of the United States military is only talking about how the military needs to become more environmentally friendly at some undetermined future date.
In conclusion the claims made and actions taken by Mozilla and Wikimedia are disingenuous at best. If either organization has real environmental concerns about the currencies they accept, they have a funny way of demonstrating it.