Mayor wants to make Vancouver Bitcoin central — climate experts disagree

Vancouver mayor Ken Sim wants to transfer some of the city's financial reserves into Bitcoin cryptocurrency  — and says it will be good for the climate, too. His claim has some experts scratching their heads. 

Sim is a crypto proselytizer. Last week, he preached in a video interview for the Coin Stories podcast that he believes Bitcoin "is the greatest invention in human history." 

His proposal would order city staff to assess the feasibility of making Vancouver "Bitcoin-friendly," for instance, by accepting payments in Bitcoin and investing some of the municipality's financial reserves into the cryptocurrency. 

Sim's motion, which will go to a vote on Wednesday, claims that "Bitcoin mining has shown environmental benefits" that are realized when mines use electricity that would otherwise be wasted. The motion did not cite sources and the mayor's office did not provide any to Canada's National Observer when requested. 

Fellow council members aren’t buying it.

"It's ridiculous," said Adriane Carr, one of Vancouver's two Green Party councillors. 

The claim is inconsistent with Sim’s recent assertions about electricity in the province. Council just had a "huge debate" over Sim's proposal to reverse a ban on natural gas heating in new buildings, which he justified, in part, by arguing B.C. doesn't have enough electricity to heat new buildings. Integrating an electricity-intensive technology like Bitcoin into the city's financial strategy days later "just does not make any kind of sense," she said. 

"It is very irresponsible to say that crypto is absolutely bad for the environment, and it is equally irresponsible to say crypto is absolutely really good for the environment," said Kaveh Madani, director of the United Nations' University Institute for Water, Environment and Health. "Everything should be evaluated on a case by case basis." 

Cryptocurrencies like Bitcoin are infamous for having substantial impacts on climate, water and land, primarily linked to the massive amounts of electricity needed to "mine" the currency. This is a process when computers scattered around the world verify transactions made with the currency. 

Even if some Bitcoin mines are powered with renewable energy, the technology's distributed and anonymous structure makes it nearly impossible to prove any specific transaction was powered sustainably. 

Researchers estimate that each Bitcoin transaction generates as much carbon emissions as driving a gas-powered car around 2,200 km. Between 2020 and 2021 alone, U.N. researchers estimated that if Bitcoin mining were a country, it would rank 27th in the world in energy use. The sector's electricity demand is so high that B.C. has temporarily banned crypto mining until officials can figure out if the province has enough power. 

The U.N. study found that nearly half of the energy used to mine Bitcoin was generated from coal, and about a fifth came from natural gas. Hydroelectricity powered about 16 per cent of transactions, while renewables like wind and solar only met a tiny fraction of the demand. 

Researchers have also noted that the computers and other equipment used for Bitcoin mining are also energy- and resource-intensive to produce and transport, augmenting the technology's ecological toll. 

China was by far the world's biggest Bitcoin-mining nation, and the country accounted for a lot of the coal used to power the transactions. Russia, Kazakhstan, the U.S. and Canada were also major players in the Bitcoin mining industry, the study found. 

Madani flips Sim’s formulation on its head. "It is a question of opportunity cost: Would it be possible to channel that electricity toward another use?"  

Traditional financial systems aren't without their own ecological impacts, like printing money, he noted. But Bitcoin is one of the most energy-intensive crypto-currencies in circulation — and its benefits don’t necessarily match its costs.

“Those who suffer from the impacts [of crypto mining] are not the main or direct beneficiaries of the currency," he said.