The carbon emissions associated with bitcoin mining can undermine global sustainability efforts and that should be part of a universal discussion.” The premise is formed by summarizing the comments of Italian economist Fabio Panetta, a member of the executive board of the European Central Bank (ECB), in an article published on Tuesday (11) by the global news agency Project Syndicate.
In the text, Panetta acknowledges that, albeit temporarily, carbon dioxide emissions have been reduced due to social isolation caused by the coronavirus epidemic. He said that cryptocurrency mining has potential damage to the ecosystem.
For him, cryptocurrency mining should be controlled and limited due to its environmental impact and one of the ways would be through the regulation and taxation of companies in the sector.
“Bitcoin alone is already consuming more electricity than the Netherlands,” said Panetta, adding that “controlling and limiting the environmental impact of crypto, including through regulation and taxation, should be part of the global discussion.”
Elsewhere in the text, the economist cites three priorities that stand out in the international agenda on the environment, with regard to the ‘Paris Agreement’, which is an international effort to combat climate change. The treaty was signed by 175 countries in April 2016 in New York (USA).
The first priority, Panetta quoted, is the need to raise global carbon prices; the second is to use the recovery from the COVID-19 pandemic to “rebuild better”. Finally, he concluded, the third priority goes to the heart of the financial system and the central bank: financing the green transition.
“International coordination is essential”
Quoting the Nobel William Nordhaus, he recommended: “Climate change is the quintessential global externality. Its effects are spread around the world and no country has sufficient incentives or capacity to solve the problem alone. International coordination is therefore essential ”, wrote the economist.
The term ‘quintessence’ refers to ‘fifth essence’ which is an ancient theory studied to this day. Aristotle, for example, considered that the universe was composed of four main elements – earth, water, air and fire -, plus a fifth element that prevented the celestial bodies from falling on Earth.