There are huge red flags when it comes to proof-of-work cryptocurrencies
First of all, energy usage
If you look at
https://cbeci.org/, you can see that the Bitcoin network is using about as much energy as the entire country of Sweden right now.
Other proof-of-work cryptocurrencies like Ethereum and Dogecoin use less for the simple fact that the network is not as big
(yet
)
Energy usage is indirectly tied to transactions, resulting in one Bitcoin transaction using about 650kWh of energy, or about 20-30 days of a typical household's energy usage.
Please read up on it. Mining is done by datacenters on an insane scale, mostly in China, and mostly using non-renewable energy. It's undoing years of effort to reduce energy usage and CO2 emissions just for some volatile play money that isn't viable as a currency.
Secondly, it's a ponzi scheme at it's core
What determines the value of Bitcoin? Supply and demand. There is nothing physical or regulatory that determines the value, it is not really used as a currency, 99% of people buy bitcoin to re-sell it once it rises in value.
This is at its core a Ponzi scheme, and it's foolish to think that Bitcoin will always go up or will eventually plateau and neither rise or fall in value. Its value is determined by hype, and if it's not rising anymore people start panic-selling.
As with any Ponzi scheme, you can make good money with it, same as with Wall Street pump & dump schemes, and if it wasn't for the environmental impact, sure.
Thirdly, it's not viable as a currency
Currently, the Bitcoin network is processing tens of transactions per second, because as time progresses, validating transactions
(which is what Bitcoin mining actually is
) gets harder.
Usually, financial systems are made to be fast and energy-efficient. Bitcoin is the opposite, making validating transactions as hard as possible where it is barely profitable.
If you scaled up the Bitcoin transaction volume to the entire size of the US, you'd quickly find out it would use more energy than was ever produced on this planet.
Sure, some will say, Ethereum scales the mining difficulty according to transaction volume, but it still means all mining efforts will always run at 100%, no matter what volume, and at a high volume and new investing, the mining effort expands
Bonus: e-waste
Apart from causing a years-long GPU shortage, crypto mining produces an insane amount of e-waste. Mining rigs only stay profitable for a short time because newer hardware that can mine even faster is always around the corner, also hardware is essentially used until it breaks because it's running 24/7 and is of course overclocked.
So yeah, I can't recommend it.
TL;DR: Proof-of-work crypto is an environmental disaster and Ponzi scheme.
Edited by Karpour 2021-03-08 3:36 PM