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Cryptocurrencies have become an increasingly popular investment asset in the United States over the past decade.
At the same time, American investors have started prioritizing environmental, social and governance (ESG) strategies to limit their exposure to assets that could harm the environment.
A new Forbes Advisor poll finds that despite an expressed interest in ESG investing, many Americans familiar with crypto fail to understand the potentially negative impact on the environment, particularly Bitcoin (BTC).
Bitcoin currently consumes electricity at an annual rate of 127 terawatt hours (TWh), according to the Cambridge Center for Alternative Finance. That exceeds Norway’s total annual electricity consumption.
Here’s a closer look at how Americans view cryptocurrency investments and their impact on the environment.
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Americans don’t understand the environmental impact of Bitcoin
We asked a panel of 2,000 Americans familiar with cryptocurrencies what impact Bitcoin is having on the environment and climate change. A total of 58% said it had little or no impact on the environment.
- About 32% say they believe Bitcoin has no impact on the environment.
- Another 26% responded that they think BTC is “good for the environment.”
- Only 6% say Bitcoin poses a significant environmental threat.
But here’s the catch. Bitcoin consumes a huge amount of electricity, making it a major source of carbon emissions.
US bitcoin miners produced 0.85 pounds of carbon dioxide per kilowatt-hour of energy consumed in 2020. Bitcoin mining produces an estimated 40 billion tons of carbon dioxide, and the US accounts for more than 37% of the world’s total bitcoin mining capacity.
One estimate states that every bitcoin purchase or sale transaction generates half a ton of CO2.
To make matters worse, the carbon emissions required to mine one bitcoin double roughly every four years — each time bitcoin undergoes a “halving,” halving the cryptocurrency’s mining rewards.
Joe Sweeney, managing partner at Cornerstone Wealth, says Bitcoin is a problem for any investor concerned about ESG principles.
“With so much focus on ESG investing, bitcoin mining has never been good from an energy consumption standpoint. Of course, given the supply shortages caused by the Russia-Ukraine war, it’s even worse today,” says Sweeney.
Most Americans want green investments
Our survey found that Americans might reconsider their Bitcoin investments if they fully understood its massive carbon footprint.
When asked if they would consider investing elsewhere if they found out that a cryptocurrency had a significant negative impact on the environment, 65% of investors said yes.
Unfortunately, young Americans seem to be the least informed about Bitcoin’s carbon footprint:
- 67% of respondents aged 18-25 (Gen Z) and 71% of investors aged 26-41 (Gen Y) say they would consider alternatives to polluting cryptocurrencies.
- 41% of respondents aged 18-25 believe Bitcoin has no impact on the environment, while 18% said BTC is good for the environment.
- 35% of respondents aged 26-41 believe Bitcoin has no environmental impact and 26% say BTC is good for the environment.
- Half of respondents aged 77 and older – the Silent Generation – believe that Bitcoin has no impact on the environment, with 18% saying it is good for the environment.
The survey also shows that Americans are taking their ESG priorities seriously when it comes to stocks.
About 58% of respondents who own some form of fixed assets say they would avoid stocks because of their environmental impact, including 68% of Gen Z and 63% of Gen Y investors.
In the first 11 months of 2021, ESG funds saw record inflows of $649 billion, more than double the $285 billion in ESG fund inflows for the same period in 2019.
Armando Senra, head of BlackRock’s iShares Americas, recently predicted that global ESG investing could reach $1 trillion by 2030.
But American investors don’t seem to compare cryptocurrencies with big energy stocks like ExxonMobil (XOM) and Chevron Corp. (CVX) or highly fossil-fuel dependent automakers like Ford Motor Co. (F) and General Motors (GM).
Owen Murray, director of investments at Horizon Wealth Advisors, says that the high level of speculation in the crypto market suggests that many Americans who own crypto don’t think too much about Bitcoin’s impact on the world.
“My impression is that most crypto investors don’t really know or really care about the environmental impact,” says Murray.
Our survey also found that 44% of respondents were more concerned about the potential return on a crypto investment than its environmental impact.
- Nearly 58% of respondents aged 58-76 – baby boomers – said potential return on investment was the most important factor in deciding whether to invest in a particular crypto, with only 5% of this cohort citing crypto’s environmental impact as cited worrying.
- Cost and the potential return on investment were the top concerns of Gen Z respondents aged 18-25, with just 11% citing environmental concerns.
Solutions to Bitcoin’s energy problem
One possible solution to Bitcoin’s energy problem is to mine the cryptocurrency using renewable energy. But crypto mining has increased its carbon footprint since China cracked down on cryptocurrency mining last year and miners fled to the US and Kazakhstan.
Driven out of China, where hydroelectric power is plentiful, the percentage of global energy used to mine bitcoin from renewable sources fell from 40% in 2020 to about 25% in August 2021.
Even with Beijing’s crypto mining ban, miners have moved their work underground. According to a May report published by the Cambridge Center for Alternative Finance, the country still accounts for more than 21% of the bitcoin mining market despite China’s ban. The US retains its #1 position as the largest mining center.
“The fact that cryptos are created by torturing computers with mindless toil to mine the coins is just further proof of the absurdity of the entire cryptocurrency complex,” says Murray.
But some crypto solutions are lurking.
Bitcoin’s biggest rival, Ethereum, is currently implementing a solution to its energy problem by moving from a proof-of-work methodology to a proof-of-stake consensus mechanism.
Ethereum estimates that its energy consumption will fall by 99.95% once it completes “the final chapter of Ethereum’s proof-of-work,” which is expected to be completed later this summer, likely in August.
survey methodology
This online survey of 2,000 American adults was commissioned by Forbes Advisor and conducted by market research firm OnePoll in accordance with the Market Research Society’s Code of Conduct. Data was collected between May 13 and 17, 2022. The margin of error is +/- 2.2 points with 95% confidence.
This survey was overseen by the OnePoll research team, a member of MRS with a corporate membership in the American Association for Public Opinion Research (AAPOR). For full survey methodology, including geographic and demographic sample sizes, contact [email protected]
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