Money Rehab with Nicole Lapin - How an Online Currency Hurts the World IRL

Episode Date: August 12, 2021

Even though cryptocurrency only exists online, it has very real environmental effects IRL. Bitcoin production uses the same amount of energy as entire countries. All of this sounds like bad news for Mother Earth, right? There’s only one planet and plenty of cryptocurrencies, so we have to put the planet first. Let’s take a look at some solutions. Learn more about your ad-choices at https://www.iheartpodcastnetwork.comSee omnystudio.com/listener for privacy information.

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Well, it doesn't. Charge for wasting our time. I will take a check. Like an old school check. You recognize her from anchoring on CNN, CNBC, and Bloomberg. The only financial expert you don't need a dictionary to understand. Nicole Lappin. So far on Money Rehab, we've had so much fun, this is our version of fun, talking about cryptocurrency.

We've talked about NFTs, we've talked about blockchain, and my personal favorite, dogecoin. Or dogecoin. But there are some not-so-fun aspects to cryptocurrency, too. Today, listener Molly writes in with this question. Hey, Nicole, I'm thinking about investing in Bitcoin, but my sister told me that crypto is bad for the environment. Is that true? But I thought crypto is digital. So how is that possible? I know, right? Cryptocurrency is an entirely digital currency. So if it doesn't exist in the physical world, how could it be affecting the physical world? It's a concept that can totally make your head spin. But we have to steady ourselves because it's 100% true.

Cryptocurrency is digital. I'm not going to rock your world and tell you that there is a pot of doggie dogecoin at the end of the rainbow. The only way you're going to be holding doggie coin in your hands is if you come over to meet my doggie coin, Penny, and you can follow her at doggie coin on Instagram, FYI. So even though the currency isn't physical, it is made by physical systems. And that's where the environmental impact comes in. Let's double click on Bitcoin for a second, because it's one of the least efficient cryptocurrencies to manufacture. And it's also been researched the most thoroughly. So there is plenty of data on the effects of its production process. And here on Money Rehab, we do love us some data. So let's talk about how

Bitcoin is made. We touched on this in our episode on NFTs, but I think we're due for a refresher. Bitcoin is created in a process called Bitcoin mining. But I promise you, the process of Bitcoin mining is not what you might think of when you picture traditional mining. When you think of mining, you're probably thinking of, well, a mine with hard hats and caves and canaries. But Bitcoin mining doesn't happen in a mine. It happens on a computer. And this is the interesting part of Bitcoin. Anyone can mine Bitcoin and you can do it from anywhere in the world so long as you have access to a computer. That makes Bitcoin completely different from government-backed currencies like the U.S. dollar. Nictionary note here, if you want to impress your friends, the financi term for

government-backed currencies is fiat currencies. Okay, back to Bitcoin mining. Can you imagine if anyone could print dollar bills? Not only that, but imagine that you could just print dollar bills and do it at home without getting out of your PJs. If this was a thing, I would do it. I mean, wouldn't you? So why isn't everyone making, mining Bitcoin? Here's the catch. While you can mine Bitcoin through a computer, it's a pretty complicated process. In order to create one Bitcoin, you need to program your computer to solve billions of calculations per second. And as you can imagine, it takes up a lot of energy for a computer to do billions of calculations. Think of how much mental energy

it takes to calculate the three categories of your spending plan. And that's just three calculations. Now we're talking about billions? I'm exhausted just thinking about it. To put it into perspective, it's estimated that one Google search takes about 0.0003 kilowatt hours of energy. And the average American household uses about 30 kilowatt hours of energy every day. How much energy does it take to mine one Bitcoin? Around 1,544 kilowatt hours of energy. That's the equivalent to over 5 million Google searches or the amount of energy you use in 53 days at home. Have I knocked your socks off yet? Yes? Well, I'm going to keep going because we're just talking about the process of mining one Bitcoin. But what about 18.5 million Bitcoin that have already been

mined? That's a freaking lot of energy. Bitcoin mining is now an industry that's using the same amount of energy as entire countries. According to CNBC, Bitcoin has a carbon footprint comparable to that of New Zealand. That alone is mind boggling. But let's go a little bit deeper. What does that mean for places where this mining is actually taking place. Can a country bear the weight of an industry moving in that is essentially a country within itself? The short answer is no. Countries with many Bitcoin mining efforts like Georgia and Iran have had rolling blackouts as a result of all of the energy expenditure. So all of this sounds like bad news for Mother Earth, right? And there is only one planet and plenty of cryptocurrencies. So we have to put the planet

first. Let's take a look at some solutions. First of all, not all cryptocurrencies rely on this mathy, intensive mining process. And therefore, not all cryptocurrencies require as much energy to produce as Bitcoin. And on the other side of the coin, so to speak, there are actually some currencies that reward environmentally friendly investments like SolarCoin. But if Bitcoin is here to stay, then we should focus on making mining more efficient. One way to do this would be to use renewable energy for production instead of fossil fuels. Some countries have gotten a head start on this. In Iceland, for example, cryptocurrency miners are using renewable energy to power their computers. Plus, in countries with cooler climates like Iceland,

computer servers can actually be cooled down naturally. But my personal favorite? There are some people that argue that cryptocurrency mining could be a great way to harness natural sources of energy that are currently untapped, like, and I'm being serious here, volcanoes. In El Salvador, the government is encouraging companies to find a way to use geothermal energy from the country's volcanoes for crypto mining. So when you start hearing about volcano coin, say you heard it on Money Rehab before it was cool, please. Wait, volcano? Okay, title TBD. But there's definitely a pun in there somewhere. In the meantime, some companies are stepping up and pausing partnerships with cryptocurrencies to put pressure on finding energy efficient ways of mining. Famously,

Elon Musk, who had allowed customers to buy Teslas with Bitcoin, paused that payment program out of concern for the environment, as Tesla does. The Guardian has some great reporting on this topic. And they throw a little shade at us, the folks at home, by noting that the energy wasted by plugged in but inactive home devices in the U.S. alone could power Bitcoin mining for 1.8 years. So we can't put this environmental mess all on Bitcoin miners and Elon Musk. We're going to have to do our part a little bit more for Mother Earth than just not mine Bitcoin. Which brings us to today's tip you can take straight to the bank. If you're interested in crypto,

you should do the planet a favor and make your own personal carbon offset. I'm not saying that if you buy a Bitcoin, you should shut off your power for 53 days. But yeah, maybe take shorter showers and quit plastic bags and use some of the dividends in your crypto investments to donate to environmentally friendly causes. And listen to our episode on the ways to help the environment and your wallet. Duh. Money Rehab is a production of iHeartMedia. I'm your host, Nicole Lappin. Our producers are Morgan Lavoie and Catherine Law. Money Rehab is edited and engineered by Brandon Dickert with help from Josh Fisher.

Executive producers are Mangesh Hatikader and Will Pearson. Huge thanks to the OG Money Rehab supervising producer, Michelle Lanz, for her pre-production and development work. And as always, thanks to you for finally investing in yourself so that you can get it together and get it all.