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The Economic Collision Of The Crypto Market: Stockholm Gives Nobel, Oslo Withdraws Subsidies

26 November 2018 12:41, UTC   |    4671
The Economic Collision Of The Crypto Market: Stockholm Gives Nobel, Oslo Withdraws Subsidies
By Oleg Koldayev

The fall in the exchange rate of cryptocurrencies is a disappointment for private miners and happiness for eco-enthusiasts, since standard mining of digital coins using the PoW protocol can become unprofitable and, as a result, energy costs and associated environmental losses will be reduced. Will ecological persecution of digital production leave it as that?

Evidently, it will not. The Norwegian authorities went even further: a widely advertised couple of months ago, the subsidy for electricity for farms oriented to the generation of virtual assets is being canceled. In the new budget year, crypto-businessmen will have to pay for the light not $0.05 per kilowatt per hour, like today, but $2. This is due to the fact that cryptocurrency farms are no longer equal to processing companies and will be charged as simple consumers.

“Norway cannot continue to provide huge advantageous rates for the dirtiest form of issuing cryptocurrency, which requires a lot of energy and generates the largest greenhouse gas emissions in the world,” said Lars HALTBRECKEN, the member of parliament, the representative of the Socialist “Left Party”. Is the politician right?

Indeed, one Bitcoin transaction this summer required 934 kWh of electricity, while mining farms were responsible for the release of 17.7 million tons of carbon dioxide per year. This is the size of the carbon footprint being left by the digital economy. However, these millions of tons are only 0.07% of the total amount of greenhouse gases released into the atmosphere of the earth annually due to human fault. For comparison, only New York City discharges 54 million tons annually. In other words, the environmental damage caused by technological processes associated with the turnover of virtual assets is vanishingly small against the background of the damage that all human activity causes to nature. The beneficial effects associated with the development of the digital economy are disproportionately more numerous.

According to the generally accepted opinion, the development of human potential leads to the reduction of environmental risks. The higher the intellectual, educational, cultural, and social level of the individual is, the more he is interested in environmental issues, the use of clean technologies, and power management. The modern economy is an economy of social capital. The digital market is no exception. It requires not only the electricity costs but also serious intellectual efforts from each of its participants, thereby contributing to the development of the individual. The dependency between business and society is direct today. Moreover, digital coins and the blockchain can help solve truly relevant environmental issues, in particular, prevent the garbage apocalypse.

“The United States generates 255 million tons of waste annually. This is about 4,6 pounds of garbage per American per day,” says our expert, the general director of the large American blockchain company Jags PORANDLA. – “Blockchain will be able to unite the public, representatives of business and government structures in one ecosystem, aimed at the effective collection and classification of waste and its recycling, energy generation, garbage disposal, and monitoring of the ecological situation. Such projects already exist, and I participate in one of them as a blockchain consultant. The goal of this startup is to convert waste into a useful product of high economic value in the most efficient way.”

This is a simple example of how you can monetize garbage with the help of the digital decentralized technology. Moreover, the very ecological behavior of citizens can be made profitable.

“Blockchain can play a key role in creating a natural capital accounting system and free up inactive assets worth trillions of dollars,” explains our other commentator, the adviser to the investment company Veronica ANDRINO (Philippines), “Every time someone plants trees voluntarily, he can earn a useful token that can then be spent on electricity. Unused energy can also be sold to our community. So, people will be financially interested in protecting the environment and reducing the use of electricity, since they will be able to pay for other services with this coin. By doing this, we can begin to create a smart home and a smart economy.”

Cryptocurrencies, the blockchain, and ecology - are closely interrelated. The energy that miners consume is indirectly involved in the construction of a new economic reality, where a symbiosis of social and ecological capital will work effectively.

It is unfortunate that the Norwegian authorities are far from such an understanding of their environmental functions. Although very close in Stockholm, the Nobel Prize in Economic Sciences has been awarded to two scientists this year: William NORDHAUS and Paul ROMER. One received the award for studying the effects of climate change on the global economy, the other one - for the theory of endogenous growth, which implies that the development of an employee within the framework of the production process contributes to technological progress as an internal factor of economic development. Both studies have an indirect bearing upon the digital economy. Paradoxically, the Nobel Committee combined ecology and technological progress, and the Scandinavian politicians separated them. The internal contradiction between the illusion of security promoted by traditional institutions and progress is tearing apart not only the global financial market but also the national economic systems today.

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