Although 2022 was a turbulent year for Bitcoin, losing more than 60% of its value, its price has since gone up by 83%.
As adoption continues to increase, Bitcoin must continue to address concerns about its environmental, social, and governance impact (ESG). A recent report from KPMG delves into this and looks at the misconceptions that still surround Bitcoin, as well as the use cases that could potentially draw value.
Crypto Findings
When it comes to Bitcoin’s environmental impact, KPMG’s report states that it doesn’t emit direct emissions. The hardware used to mine Bitcoin is powered by electricity, and Bitcoin only uses 110 terawatt hours of energy every year, which is 0.55% of global electricity use. To put that further in perspective, it’s the equivalent of energy used to power a tumble dryer.
The study also found that there’s a lot of social awareness around Bitcoin, and it can be used to facilitate cross-border payments, especially in developing countries. Bitcoin played a crucial role in raising funds for Ukraine last year, and the efficiency and speed of access to these funds was made possible via cryptocurrency.
Ongoing Controversies
The KPMG study aims to showcase the many benefits of crypto and dispel any misconceptions about Bitcoin. But it’s important to note that confusion and controversy around Bitcoin remains.
Some legislators have heavily criticized crypto, calling it a haven for “financial criminals” and other troublemakers. Those in favor argue that the good in the industry could be negatively impacted by harsh legislation, obstructing its growth.
“Criticisms of bitcoin mining often come down to consumption of electricity in the proof-of-work protocols,” said Craig Lancaster, Analyst at Javelin Strategy & Research who recently covered the topic earlier this year in a report titled Bitcoin Mining and ESG: The States Start Moving. “But to stop there is to foreclose the possibilities of bitcoin, other cryptocurrencies, and digital assets in general. There is potential—both realized and in development—for blockchain technology to provide elegant solutions for a range of use cases, including such tough nuts to crack as cross-border payments.”
“Further, bitcoin miners, like any businesspeople, must keep an eye on the costs of doing business, and electricity is a huge one,” he said. “We’re now starting to see cooperative arrangements like the one in Texas, where miners are reducing usage during times of high demand from the electrical grid. There have been innovations where natural gas from well flaring has been used to power mining operations. These kinds of ideas can be innovative, creative, and forward-looking, a much better place to be than forever restating the challenges as if they’re insurmountable,” he said.