- >Shark Tank’s Kevin O’Leary Will Only Buy “Clean” Bitcoin
Shark Tank’s Kevin O’Leary Will Only Buy “Clean” Bitcoin
Shark Tank star Kevin O’Leary recently told CNBC he’d only buy Bitcoin mined with clean energy and that he’d never touch “blood coin” from China. He even predicted two kinds of coins in the next year or two – “Blood coin from China” and “clean coin” sourced using hydroelectricity instead of coal.
O’Leary, a.k.a Mr. Wonderful, seems to be warming up to Bitcoin. He previously swore it off, calling it garbage. In March, he expressed interest in buying it, but only if it’s “mined carbon neutral,” adding he’s not the only investor thinking this way.
Many Bitcoin users should hear that and wonder what the fuss is about. As long they can mine or trade their Bitcoin, all’s well with the universe.
But also, many Bitcoiners know their favorite crypto has ever been under fire for being a power guzzler. And now, another concern is emerging: the country that controls the biggest hash rate – China, is being accused of egregious human rights abuses. That’s a bit of a damper for Bitcoin’s reputation.
Hope Mutie | May 10, 2021
The Larger Debate
So Kevin O’Leary once dismissed Bitcoin, but he’s now a fan? No surprise there – many old-school millionaires deny Bitcoin, only to embrace it later. There’s a phrase Bitcoin fans love to say. It goes: “First they ignore you, then they laugh at you, then they fight you, and then they buy Bitcoin.” This is hardly a dig at Mr. Wonderful. It’s just the way the cycle tends to play out.
Now that the savvy investor has finally come around, his thoughts on Bitcoin will undoubtedly be part of the conversation. And he’s wasted no time highlighting some of the most problematic issues surrounding Bitcoin.
Make No Bones About It: Bitcoin’s Power Hog
It’s true that Bitcoin consumes a ton of energy. Countless critique pieces have been written exploring just this subject. Why does Bitcoin, a system that’s solely internet-native, gobble so much power? Let’s backpedal just briefly to understand why.
The Bitcoin network is designed to generate a block every 10 minutes. It doesn’t matter how much (or little) energy you throw at the network – it will automatically adjust to create a new block every 10 minutes.
New blocks are generated through an aptly named ‘proof of work’ mechanism. The process involves guessing the correct hash to an equation. Between the 10-minute intervals, every computer on the network makes countless guesses until one finds the hash to unlock the next block of transactions. This guessing process consumes terawatt-hours (TWh) of electricity.
Per an analysis by Cambridge University, Bitcoin uses approx. 121.36 TWh per year. That’s more than is consumed by the country of Argentina.
As you’d expect, environmentalists are not enthused. Even Elon Musk’s Tesla took flak for buying Bitcoin while being known as the ‘poster-child’ of clean energy.
Chinese miners account for over 60% of Bitcoin mining. That’s due to subsidized electricity prices by the government but also reliance on coal. 40% of Chinese Bitcoin mining is powered by coal. The problem is coal is a cheap source of electricity but expensive for the environment.
Bitcoin already has a carbon footprint comparable to Bulgaria’s, according to Digiconomist. Nature Climate Change estimates if Bitcoin were to be broadly adopted, it could single-handedly push enough CO2 emissions to cause global warming above 2 degrees in less than 30 years.
“Institutions will not buy coin mined in China, coin mined using coal to burn for electricity,” said O’Leary. That’s not a fact – at least now, but it signals the urgency developing in investment circles regarding Bitcoin’s effect on the environment.
A Human Rights Problem
It’s not just the environmental concerns. Increasingly, people and press are pointing towards China’s ongoing human rights violations as an ethical issue for Bitcoin. China’s Xinjiang region, which hosts 36% of Bitcoin mining, is currently at the center of egregious human rights abuses. The Chinese government is accused of mass detention and torture of the Uyghur Muslims and other subgroups.
Over a million Uyghurs have been arbitrarily detained in the Xinjiang region. Officials say these are “re-education” camps to eradicate “extremist thoughts”. But there’s evidence people are detained for reasons like going to the mosque or having too many kids.
The fact that these flagrant human rights violations are occurring in this day and age is cause for alarm. Several countries have declared it genocide. The US, Canada, the EU, and UK have all imposed sanctions.
This was another concern for O’Leary. Aside from carbon emissions, human rights have also “come for to the fore on Bitcoin”, he said. He asserted institutions are going to steer clear from buying Bitcoin from countries “with sanctions on them.”
China’s Domination Will Soon End
It doesn’t look like China will be king of Bitcoin mining too much longer. In 2017, the country dominated Bitcoin mining by as much as 85%. Four years later – that’s about 65%. This decline is attributable to China’s commitment to reduce carbon emissions drastically. President Xi Jinping has vowed to cut carbon intensity by at least 65% before 2030 and achieve carbon neutrality by 2060.
Already, China plans to shut down coal plants in Inner Mongolia – which accounts for 8% of Bitcoin mining worldwide. Also, there’s an increasing sentiment among miners around the world to switch to eco-friendly Bitcoin mining. Once more miners around the world take over, China’s dominance will be slashed significantly.
Besides, companies like Jack Dorsey’s Square have ongoing efforts to fund companies that research ways to integrate green technologies into Bitcoin mining. Through the Bitcoin Clean Energy initiative, Square Inc has committed $10 million to this endeavor.
As for China’s human rights issue, it appears that will continue to be a thorn in Bitcoin’s side in the foreseeable future. China shows no signs of stopping its gross human rights violations, despite worldwide condemnation.
Is it a stain on Bitcoin’s reputation? Some people would see no correlation at all. Others think Bitcoin is knee-deep guilty. The big question is if Bitcoin will suffer from its association with China, as O’Leary would assert. The answer, similar to many questions about Bitcoin, is that it remains to be seen.