Internal Dilemmas: Investing in Bitcoin & Clear Consciences

In journalism circles, there’s a debate surrounding cryptocurrencies. Sure, there are the arguments as to just how viable these instruments—namely, bitcoin—are as long-term investments, or whether they are mirages created through irrational exuberance.

But moving beyond that, there’s a question as to whether journalists who cover cryptocurrencies and distributed ledgers should be buying digital currencies in the first place. The argument here is that there’s a conflict of interest—if you bought $100 worth of litecoin when it was $7 a coin at the beginning of March, will you really be able to objectively write about the price rise to over $300 a coin just nine months later, or drops below $150 by February?

There’s an argument to be made against journalists investing in these cryptocurrencies, to be sure, but that’s not the reason why I’ve stayed away from these volatile instruments. No, I am anti-bitcoin because of the damage the mining of these coins does to the environment. And if we continue mining these coins, it will do more lasting damage than mining actual gold, say some estimates.

According to a story that recently ran in Wired, citing a report by Digiconomics, worldwide bitcoin mining in 2016 used more electricity than the entire country of Serbia. That means that bitcoin, according to the article, emits the equivalent of 17.7 million tons of carbon dioxide every year. And more troubling, the article also cites an estimate by analyst Eric Holthaus that by July 2019, the global bitcoin network will require more electricity than what is required to power the entire US, and more than what the entire world uses today by November 2020. 

The Silent Minority

Even though, from a political perspective, I lean center-right, I also consider myself to be something of an environmentalist. While this might seem like an oxymoron to some—and especially with the group of vacuous husks currently inhabiting the White House—there are those in the Republican party who do believe that climate change is real and a major threat, and that there are free market solutions to help curb the effects of climate change. They also believe that the environmental sector, if buoyed, can create more jobs than, say, the coal mining industry. Again, while this might sound crazy with Donald Trump in office, it was also Republican presidents like Theodore Roosevelt, Richard Nixon and George H.W. Bush who were environmental advocates. (Feel free to send all your angry emails countering that last sentence to anthony.malakian@infopro-digital.com.) 

I do not plan to have children, so I’m not necessarily concerned with saving the world for future generations—that’s just a pleasant byproduct, but I’ll be dead. I just believe that strong conservation policies can help grow a strong economy, replete with new, skills-based jobs, rather than menial part-time work. As best I can tell, bitcoin is the epitome of greed: long-term damage in the name of short-term profit, but to each their own. As for me, I’m going to take a pass on investing in cryptocurrencies, at least until there’s verifiable, independent research that proves that these environmental-impact assessments are vastly overblown, or that new ways of mining are created.  

ESG Scorecard

It should also be noted that I am not an expert in this field; these are just my thoughts and feelings from what I’ve read and know about the subject as of right now. But there’s one more thing to think about: There are numerous studies that show that firms with high performance on material sustainability issues outperform those with lower scores. Simply put, investing in environmentally conscious companies is good for the bottom line. Even BlackRock’s CEO, Laurence Fink, wrote in his annual letter to chief executives of companies in which BlackRock invests that they will look to continue investing in companies that “understand the social impact of [their] business, as well as the ways that broad structural trends—from slow wage growth to rising automation to climate change—affect [their] potential for growth.”

If there is a sea change underfoot when it comes to investing, should we also not punish those firms that are investing in bitcoin futures or, eventually, in bitcoin ETFs? (Punish with investment, not with government intervention. Again, Republican.)

If one is being responsible, these are questions and ideas that need to be examined. I certainly don’t have the answers. To repeat…not an expert. I just know that my conscience will be a little bit clearer by avoiding cryptocurrencies, even if my wallet is a little bit lighter, too.