The True Cost of Bitcoin and NFTs
Blockchain takes a substantial toll on the environment that experts are beginning to reckon with
The price of one bitcoin, as I write this, is $57,383 — more than 10 times what it cost just a year ago. That price is volatile, so it will be different by the time you read this. But rest assured it will remain expensive.
There’s another toll, though, for every bitcoin created: the toll it takes on the environment. It’s one that is not paid in full by either the miner or the buyer. As bitcoin reaches new heights, fueled by advocates such as Elon Musk and Jack Dorsey, it’s a cost that’s becoming impossible to ignore.
Crypto faces a climate reckoning.
Whether or not you agree with the Citi analyst who recently predicted it will become the “currency of choice for international trade,” or the Square CFO who believes it has the potential to be “the native currency of the internet,” it’s safe to say that cryptocurrency is here to stay.
Meanwhile, after years of crypto enthusiasts insisting that the blockchain will disrupt everything, it’s finally starting to disrupt at least something other than financial regulation. NFTs, or non-fungible tokens built on blockchains, have exploded in popularity as markers of ownership for digital artworks and other virtual collectibles. A pseudonymous crypto investor this week bought an NFT of illustrations by the digital artist Beeple for $69 million, reportedly the third-highest sale price ever for a work by a living artist. Twitter and Square chief Jack Dorsey’s NFT of his famous first tweet has fetched $2.5 million; naturally, he plans to convert the proceeds to bitcoin (and then donate them to poor families in African countries, via GiveDirectly).
Crypto idealists see blockchains as the infrastructure for a radically decentralized future in which people can transact seamlessly around the world and verify authenticity without the need for financial institutions or governments as gatekeepers. For a fascinatingly starry-eyed journey into this vision, try this January post by Not Boring’s Packy McCormick on the value chain of the open metaverse.