84% of Americans do not believe that Bitcoin investments are a threat to the environment – Forbes Advisor

Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors’ opinions or evaluations.

Cryptocurrencies have become an increasingly popular investment asset in the US 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 Center 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.

US 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 US 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.

Unfortunately, young Americans seem to be the least informed about Bitcoin’s carbon footprint:

  • 67% of respondents aged 18 to 25 — Gen Z — and 71% of investors aged 26 to 41 — Gen Y — say they would consider alternatives to cryptocurrencies that harm the environment.
  • 41% of respondents aged 18 to 25 believe Bitcoin has no impact on the environment, while 18% said BTC is good for the environment.
  • 35% of respondents aged 26 to 41 say they believe Bitcoin has no impact on the environment, and 26% say BTC is good for the environment.
  • Half of the respondents aged 77 and above — the Silent Generation — believe Bitcoin has no impact on the environment, with 18% saying it was good for the environment.

The survey also finds that Americans are serious about their ESG priorities regarding stocks.

Approximately 58% of respondents who own some form of investment assets say they would avoid stocks because of their environmental impact, including 68% of Gen Z and 63% of Gen Y investors.

Through the first 11 months of 2021, ESG-focused funds saw a record $ 649 billion in inflows, more than double the $ 285 billion in ESG fund inflows during the same period in 2019.

Armando Senra, the head of BlackRock’s iShares Americas, recently projected global ESG investing could reach $ 1 trillion by 2030.

But American investors don’t seem to be lumping cryptocurrencies in with big energy stocks like ExxonMobil (XOM) and Chevron Corp. (CVX) or automakers heavily dependent on fossil fuels like Ford Motor Co. (F) and General Motors (GM).

Owen Murray, director of investments for Horizon Wealth Advisors, says the high degree of speculation in the crypto market suggests many Americans who own crypto aren’t putting too much thought into Bitcoin’s impact on the world.

“My impression is that most crypto investors don’t really know or really care about the environmental impact,” Murray says.

Our survey also found that 44% of respondents were more concerned about a crypto investment’s potential return than its environmental impact.

  • Nearly 58% of respondents aged 58 to 76 — Baby Boomers — said the potential return on investment was the most important factor when deciding whether to invest in a particular crypto, with only 5% of this cohort citing crypto’s environmental impact as a concern.
  • The cost and potential return on investment were the main concerns among Gen Z respondents aged 18 to 25, with only 11% citing environmental concerns.

Solutions for Bitcoin’s Energy Problem

One possible solution to Bitcoin’s energy problem is to mine the cryptocurrency using renewable energy. But crypto mining has increased its carbon footprint since China’s crackdown on cryptocurrency mining last year, with miners fleeing to the US and Kazakhstan.

Forced out of China, where hydroelectric power is plentiful, the percentage of global energy used to mine Bitcoin from renewable sources dropped from 40% in 2020 to about 25% as of August 2021.

Also, with Beijing’s crypto mining ban, miners have taken their work underground. According to a May report released by the Cambridge Center for Alternative Finance, the country still accounts for more than 21% of the Bitcoin mining market despite China’s ban. The US retains its No. 1 position as the largest mining hub.

“The fact that cryptos are created by torturing computers with pointless busywork to mine the coins is just further evidence of the absurdity of the entire cryptocurrency complex,” Murray says.

But some crypto solutions are lurking.

Bitcoin’s biggest rival, Ethereum, is currently implementing a solution to its energy problem by switching to a proof of stake consensus mechanism from a proof of work method.

Ethereum estimates its energy usage will decrease by 99.95% once it closes “the final chapter of proof of work on Ethereum,” which is estimated to be completed later this summer, likely in August.

Survey Methodology

This online survey of 2,000 US adults was commissioned by Forbes Advisor and conducted by market research company OnePoll, in accordance with the Market Research Society’s code of conduct. Data was collected between May 13-17, 2022. The margin of error is +/- 2.2 points with 95% confidence.

This survey was overseen by the OnePoll research team, a member of the MRS with a corporate partnership with the American Association for Public Opinion Research (AAPOR). For a complete survey methodology, including geographic and demographic sample sizes, contact pr@forbesadvisor.com.

Leave a Comment

%d bloggers like this: