On Wednesday, Sen. Elizabeth Warren (D-Mass.) condemned the very existence of the cryptocurrency Bitcoin, claiming that the data mining involved in the creation and the security of Bitcoin represents a dire threat to the planet. She did so on the very day that El Salvador formally accepted Bitcoin as legal tender in a move that might herald a growing acceptance of cryptocurrencies.
Warren warned about “the adverse environmental impact of the computing activity used to mint many of these digital currencies in the first place. Bitcoin consumes more energy than entire countries and it is projected to consume as much energy as all the data centers in the whole world this year. One Bitcoin transaction, a single purchase, sale, or transfer, uses the same amount of electricity as the typical U.S. household uses in more than a month.”
Neha Narula, director of the Digital Currency Initiative at the media lab at the Massachusetts Institute of Technology (MIT), explained that the large computing power is necessary to secure Bitcoin’s value as a currency. Bitcoin enables broad access to the currency without flooding the system. The “mining” or “proof of work” computing power prevents Bitcoin from losing its value.
“Once these participants have expended this energy, and expened this computing power, in order to rewrite the block chain, in order to change history, one would have to expend an equivalent amount of power and energy. It’s a pretty fundamental part of the underlying security of Bitcoin,” Narula explained.
Yet Warren completely dismissed the computing power necessary for the currency to maintain its value. “The amount of computational power and energy for this is a disaster for our planet,” she said, condemning “environmentally wasteful cryptocurrencies.”
Bitcoin requires so much computing activity that it eats up more energy than entire countries. One of the easiest and least disruptive things we can do to fight the #ClimateCrisis is to crack down on environmentally wasteful cryptocurrencies. pic.twitter.com/derGr1bjuq
— Elizabeth Warren (@SenWarren) June 9, 2021
Warren has a point, but her description of cryptocurrencies as “environmentally wasteful” is a recipe for a terrifying power grab. If government can dictate what sort of electronic transaction is “environmentally wasteful,” not only can the government shut down a system of legal tender in El Salvador but it can also force users to ration other electronic goods and services.
Maybe Bitcoin uses too much computing power for Elizabeth Warren. That stands to reason — Bitcoin does use a lot of computing power. But what about internet searches? What about video streaming? Will the government create a system to ration each individual user’s computing power?
It sounds well and good to describe Bitcoin as an environmental threat, but if the government cracks down on Bitcoin by preventing users from mining, what happens next? The system that prevents Bitcoin mining could also prevent other things — or it could allow the government to track users online.
Warren has already shown herself obsessed with power. Her brainchild, the Consumer Financial Protection Bureau (CFPB), originally had no mechanism to hold it accountable to the political branches of the U.S. government. It meddled in the economic system without any checks and balances.
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Imagine a similar bureaucracy tasked with preventing Bitcoin mining in the U.S. The internet czar could become one of the most powerful figures in America, and if Warren fashioned this new bureaucracy after her original vision of CFPB, this czar might end up accountable to no one.
I hope you can forgive me if I don’t trust Warren when it comes to controlling the money supply and grasping the power required to prevent Bitcoin mining.