NEW YORK—As a small but growing number of credit unions begin offering Bitcoin solutions to members, they are doing so as mining for cryptocurrencies remains highly energy intensive—but efforts are also underway to cut those costs.
Bitcoin mining alone requiring the same amount of electricity as the Netherlands' annual total power generation, or 0.5% of total global electricity consumption, Morgan Stanley said in a report entitled “ESG Considerations.”
Environmental, social and governance (ESG) criteria are standards for a company’s operations that some investors use to screen potential investments.
Morgan Stanley’s analysis shows publicly listed Bitcoin mining companies have begun to promote sustainability goals, and many buy carbon credits to offset their impact or aim to use cleaner forms of energy.
PoS and PoW
Bitcoin and ether approve transactions in a highly energy intensive way known as proof-of-work (PoW). Proof-of-stake (PoS) is a more energy-efficient alternative to PoW, which could reduce the climate impact, the bank said.
The cryptocurrency Ethereum said it is hopeful of moving to PoS by late 2022, and while it requires much less energy than PoW, it brings its own challenges with risks of centralization, CoinDesk noted.
Morgan Stanley’s analysts said they also see a continued risk of governments restricting energy use for crypto mining, noting that as energy costs have risen, countries such as China and Kosova have banned mining, while others have restricted the activity.
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