Donald Trump attends the Bitcoin 2024 conference in Nashville, Tennessee in July. He has vowed to make the US ‘the crypto capital of the planet’. (Photo: Brett Carlsen / Bloomberg)
This year is shaping up to be a watershed period in the history of climate change, providing a scorching backdrop to COP29, the annual UN meeting on this burning issue currently taking place in Baku.
For one thing, according to the European Commission’s Copernicus Climate Change Service and the World Meteorological OrganiSation (WMO), 2024 will almost certainly be the warmest year on record.
2024 is also on track to be the first year in which the global annual temperature will be more than 1.5°C above pre-industrial levels.
This is significant: conservationists, scientists and policy makers often speak of the “1.5°C threshold”, and this year it will be breached for the first time. “Pre-industrial” generally refers to 1850 to 1900, because that is the earliest period with widespread, consistent surface temperature records.
These menacing milestones have been reached and breached in the same year in which the global diplomatic drive to curb rising temperatures linked to fossil fuel usage and other human activities has been chilled to its core by the election of Donald Trump to a second term as US president.
This will deal a massive blow to such efforts on a range of fronts. Bitcoin is one of many, and it’s kind of interesting.
Trump is a massive booster of Bitcoin and crypto currencies in general. On the campaign trail, in between bizarre riffs on Hannibal Lecter, sharks and electric boat batteries, Trump vowed to make the US “the crypto capital of the planet”.
Bitcoin, the world’s biggest crypto currency, surged to record highs over $84,000 as a result of Trump’s election win, taking its gains since the start of 2024 to more than 80%.
Bitcoin “mining” – which involves “mining” devices and software to confirm transactions and mint new coins – is also at the coalface of climate change. Like AI, it is power-intensive, and carbon emissions from both are set to soar over the next few years.
“Because of the electricity used by high-powered equipment to ‘mine’ crypto assets, one Bitcoin transaction requires roughly the same amount of electricity as the average person in Ghana or Pakistan consumes in three years,” the International Monetary Fund (IMF) said in its weekly blog in August.
“... Crypto mining and data centres together accounted for 2 percent of world electricity demand in 2022. And that share is likely to climb to 3.5 percent in three years, according to our estimates based on projections from the International Energy Agency. That would be equivalent to the current consumption of Japan, the world’s fifth largest electricity user.”
The IMF’s policy proposal to curb crypto and AI carbon emissions is simple and blunt: a direct tax.
“According to IMF estimates, a direct tax of $0.047 per kilowatt hour would drive the crypto mining industry to curb its emissions in line with global goals. If considering air pollution’s impact on local health as well, that tax rate would rise to $0.089, translating into an 85% increase in average electricity price for miners. Such a levy would raise annual government revenue of $5.2-billion globally and reduce annual emissions by 100 million tons (around Belgium’s current emissions),” the IMF said.
US is the biggest Bitcoin miner in the world
Well, pigs will sprout wings and fly before Trump embraces such a policy proposal. And like so many other measures to address climate change, this one will not pack much of a punch without the US on board as it is by far the biggest bitcoin miner in the world, accounting for about 38% of the global total.
Bitcoin is just the tip of the Trumpian iceberg that threatens to sink initiatives to combat climate change beneath the surface of rising sea levels.
Trump 2.0 will pull the US out of the 2015 Paris Agreement which has a long-term goal of keeping the increase in average global surface temperatures below 2 °C above pre-industrial levels.
US funding to promote clean energy abroad will evaporate and America’s unrivalled capacity to monitor climate through agencies such as the National Oceanic and Atmospheric Administration will be gutted.
A lot of US government brainpower will no longer be directed at the issue, hindering scientific research into the issue. Withdrawing the US from the United Nations Framework Convention on Climate Change – a distinct possibility – would rob the convention of expertise and funding.
Trump will also promote fossil fuel use in the US and open the floodgates to drilling for oil and gas.
This does not mean the global decarbonisation efforts will ground to a halt.
A failed businessman, Trump has no grasp on the market forces that are behind the drive to clean energy. Companies, under investor and other pressures, are moulding their operations to reach various net-zero emissions targets by certain dates.
European Union buyers, for example, are going to be forced to pay tariffs for carbon-intensive imports.
Still, Trump’s call to “drill baby drill” – which can be extended to Bitcoin as “mine baby mine” – will mean setbacks in efforts to douse the flames that are burning the planet.
A few decades hence, historians may look at 2024 as a tipping point in the climate change saga. DM