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Cryptocurrencies have become an increasingly popular investment asset in the U.S. over the past decade.
At the same time, American investors have begun prioritizing environmental, social, and governance (ESG) strategies to limit their exposure to assets that may harm the environment.
A new Forbes Advisor survey finds that despite an expressed interest in ESG investments, many Americans familiar with crypto do not understand its potentially negative environmental consequences, particularly Bitcoin (BTC).
According to the Cambridge Centre for Alternative Finance, Bitcoin currently consumes electricity at an annualized rate of 127 terawatt-hours (TWh). That exceeds the entire annual electricity consumption of Norway.
Here’s a closer look at how Americans view investing in cryptocurrency and its impact on the environment.
Americans Don’t Understand Bitcoin’s Environmental Impact
We asked a panel of 2,000 Americans familiar with cryptocurrency what impact Bitcoin has on the environment and climate change. A total of 58% said it had no environmental impact or a slight impact.
- Approximately 32% say that they believe Bitcoin has no impact on the environment.
- Another 26% answered that they think BTC is “good for the environment.”
- Only 6% say that Bitcoin is a significant environmental threat.
But here’s the rub. Bitcoin consumes a huge amount of electricity, making it a major source of carbon emissions.
U.S. Bitcoin miners generated 0.85 pounds of carbon dioxide per kilowatt-hour of energy used in 2020. Bitcoin mining is estimated to produce 40 billion tons of carbon dioxide, and the U.S. accounts for more than 37% of the world’s total Bitcoin mining capacity.
One estimate suggests that each Bitcoin purchase or sale transaction generates half a ton of CO2.
To make matters worse, the carbon emissions required to mine one Bitcoin doubles roughly every four years—each time Bitcoin completes a “halving,” which cuts the rewards issued for mining the cryptocurrency in half.
Joe Sweeney, managing partner at Cornerstone Wealth, says Bitcoin is a problem for any investor concerned about ESG principles.
“With so much focus on ESG investing, Bitcoin mining has never been good from an energy consumption standpoint. Of course, it’s worse today given supply constraints due to the Russia-Ukraine war,” Sweeney says.
Most Americans Want Environmentally-Friendly Investments
Our survey found that Americans might rethink their Bitcoin investments if they fully understood its massive carbon footprint.
When asked if they would consider investing elsewhere if they found out a cryptocurrency had a significant negative impact on the environment, 65% of investors said yes.
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