Hi there, this is Ginevra with Today I learned. I'm a trainee lawyer, international journalist and part time actress specializing in international law and classical theatre. And today we're going to talk about why China banned cryptocurrencies. So I've become interested in this topic for personal reasons months ago and then what do you know? Ironically, now I have to write about it for work whole life. Only a year ago I knew nothing about this topic and I used to think that cryptocurrencies were some kind of, you know, magic fantasy. And so I thought that it would be a really interesting topic to explore for those of you who know nothing about it equally, or maybe those who know their fair share, but they want to know maybe a different perspective. It hasn't been easy at all considering that I am a technology disaster and I'm very bad at math and there's a lot of math implied in cryptocurrencies. But once I got into the topic a little more, I overcame my resistance. And especially because it isn't only about math at all. First and foremost, I'd like to place this issue in the framework of the environment. It has been very well demonstrated that cryptocurrency transactions and the process of extracting cryptocurrencies is bad, bad for the environment. And I'm going to explore this more in depth later in the episode. But obviously these days the topic is particularly hot because COP26 is taking place in Glasgow. But just a little introduction. Why are cryptocurrencies linked to climate change at all? Well, according to Cambridge Bitcoin Electricity consumption Index, Bitcoin mining operations worldwide now use energy at a rate of nearly 120 terawatt hours per year. This is about the annual domestic electricity consumption of the entire nation of Sweden. Also, according to the website digiconomist, a single bitcoin transaction uses the same amount of power that the average American household consumes in one month and is responsible for roughly a million times more carbon carbon emissions than one single VISA transaction. Well, we all know that these days in COP26 a lot of emphasis is being put on how to cut carbon emissions. And so why is there even a doubt that cryptocurrencies are bad for the environment? And why are they so popular Nonetheless? Well, in April 2021 Bitcoin worth roughly $7,000 20 today it hit almost $65,000. And some predictions say that by Christmas time one Bitcoin will be worth more than $100,000. It follows that people are hoping to gain profit out of investing in bitcoins and as the cost of bitcoins is rising so much so is the potential profit in mining it. As a result of the value of bitcoin skyrocketing over the last year, this activity, the activity of mining has very popular and extremely lucrative. The problem is that mining bitcoins at this pace may have potential disastrous consequences for the environment. However, it isn't that simple. The discussion is very vast and I've actually researched the topic a lot and I had a chance to talk about it with loads of people for the purposes of this episode and I just wanted to offer some reflections and argument on whether or not it's ethical nowadays to use cryptocurrencies or mining them. And I want to do that by specifically talking about the Chinese ban. As always, if I am missing anything, which of course I will, this is just gonna be a podcast episode. Even though I tend to go over time. Feel free to leave me a comment, let me know if there is something I haven't considered or a different perspective on the topic I really would love to hear because there is a lot that I haven't understood about it. So please let me know. I'd like to begin by talking about COP26 a little bit COP26 is short for Conference of the Parties and it is a United nations climate change conference of the parties that signed the UN Climate Treaty. The conference has the aim to bring together states, especially rich states, to find out what they can concretely do to reduce their impact on the environment. Specifically, this conference has the objective of accelerating the process of achieving the goals set during the Paris Agreement in 2015, which was another United nations climate conference that produced a legally binding international treaty. The goal of this international treaty was to limit global warming to well below 2 degrees, preferably to 1.5 degrees Celsius compared to pre industrial levels, by cutting carbon emissions by 7% every year until 2030. So obviously that's very relevant to international law and also in terms of international human rights law, as it is more and more acknowledged that there is a human right to a healthy environment. Why is COP26 crucial? Because we need to act now. It is our last chance to save the planet. We have seen how the action of climate change is now undeniable and is hitting equally developing and rich countries. And it will hit even harder if nothing changes. The problem with this is that nations are being requested to commit to reducing their carbon emissions by 7% every year until 2030. To put that into perspective, last year when the entire World was locked down because of COVID 19. Global emissions dropped by just over 6%. And now at COP 26, nations are required to state how they're going to reduce their emissions. Concretely, what are the actual steps that they're going to take to do so? And whatever will be decided in COP26, and any pledges the country will make will need to be enshrined in national law and put into action quickly. And that is possibly the hardest part. Way harder than coming all together and discussing the issue as they're doing now in Glasgow. So China didn't participate in the conference along with Russia, creating a lot of dismay. Obviously, that raised concerns because realistically, we can't cut emissions significantly without China doing so. Speculations can be made about why China didn't participate in the conference, but really no one knows why. And China's position on the environment has been defined, controversial because while China is the lead in carbon emissions at present, last year President Xi Jinping set the target of drastically cutting carbon emissions by 2030 and becoming completely carbon neutral by 2060. So in my opinion, China needs to keep their emission high at this time to increase its per capita national wealth. They have committed to reduce their emissions significantly, but they will do it in the future. They cannot do it now. They argue also that while they may be the lead in carbon emissions at present, Western countries are still responsible for the largest share of carbon emissions per capita. So they mainly have to change their ways. However, our friend China banned bitcoins, in particular bitcoin mining. And why did it do it? Some said that by doing so, China is pursuing its environmental policy of cutting emissions completely by 2060, and that wouldn't be unreasonable. As I mentioned, there is a lot of concern about the impact that mining bitcoin has, indeed on the environment. But let me stop here for a second and let's go into a little bit of terminology that can be especially useful here. I'm not gonna go in depth because each one of these terms may require an entire podcast episode, if not more. And so, just roughly. Cryptocurrencies are a currency created digitally by complex mathematical operations. They use computer encryption to secure transactions. Bitcoin is the original digital currency that was founded during the financial crisis in 2009 by Satoshi Nakamoto, a pseudonymous for the person or people who created Bitcoin. What's interesting about Bitcoin and really cryptocurrency is that unlike the dollar, the euro, the yen, and other forms of centralized currency, Bitcoin is classified as Decentralized currency, which means that while the standard currency that define our modern economy pass through banks and are controlled by the government, there is no bank or central authority governing Bitcoins. They are not controlled by any government, anyone, and they do not pass through any bank. Really. Bitcoins are controlled by a network of users who control and verify the monetary transactions. Making a bitcoin payment is as simple as sending an email. Basically, you transfer bitcoins from your digital wallet, which you obtain when you buy the currency from a crypto exchange to someone else's digital wallet using an app or website and the person's unique bitcoin address. It's really easy. It's really just a matter of tapping on your phone or pressing some buttons on your computer. And of course, these transactions are not controlled by a bank or a government, and they can be performed anonymously, which is a great advantage, but also a disadvantage in many ways. Lastly, a blockchain is a chain of blocks that contain information. The bitcoin blockchain, for example, stores details about the bitcoin transactions, such as the sender, the receiver, and the amount of coins they're being transferred. The blockchain is made in a way that is very secure and hard to temper. And it relies on a peer to peer technology so everyone can join and create new blocks. Last but not least, mining it is the process of using powerful computers to solve complex mathematical problems. Whoever cracks the puzzle first is rewarded with a certain number of bitcoins. Miners also approve bitcoin transactions before they can actually join the blockchain, making the network even more secure. In the process of mining, computers are now using the same graphic cards that are used for gaming, which are faster, but they generate more electricity and a lot of eth. Since cryptocurrencies, and especially bitcoins, are becoming so lucrative, more and more miners are joining the business, which makes it even more difficult and competitive to solve the mathematical problems. Basically, the more miners join, the more powerful this computer have to be in order to solve the mathematical problems to obtain bitcoins. The more is the energy that these powerful computers need to consume in order to function. So why has China banned cryptocurrencies? It seems logical, right? But it really isn't. First of all, China has tried to ban cryptocurrencies for a long time. Currently there have been about 18 different bans, but it appears as this time it is for real. So much so that there has been a big migration of Chinese miners to Russia and the United States, which as a result of the ban has become the biggest market in this sector. I have talked to Ruggero Tortora, who happens to be my brother, but is also one of the smartest people I know and an expert in Chinese political economy. He wrote an entire thesis on the matter entitled Comparing the Theory of the Hegemonic Stability and the Chinese Case. I strongly encourage you to look at my brother's work because he really knows what he's talking about and he very kindly advised me on this topic. So basically we talked about the reasons why the Chinese government might have decided to ban cryptocurrencies, in particular bitcoins, that have nothing to do with the environment. Banning bitcoins means eliminating a form of private saving that can potentially lead to uncontrolled and potentially unlimited financial speculation, which China doesn't really want because their finance system is much less free and heterogeneous than the Western financial system as we know it. And here I guess we should open a brief parenthesis on the Chinese system. Well, mostly China is a state dominated economy that does not very well regard the borderless and unregulated nature of cryptocurrencies. Basically, finance is semi controlled by the Chinese state apparatus. We could talk about the Chinese system for ages, but that's another story for another time. Possibly for another podcast. We could ask more questions to Ruggero and I would strongly encourage you to pick his brain on the matter. So if you're interested in something like that, please let me know and we could consider another podcast episode about it. Reason number two, to ban cryptocurrencies, that has nothing to do with the environment. If cryptocurrencies gain power, then the national currency may lose power. And China actually wants its national currency, the yen, to be the most powerful currency in the world in a matter of years. So the Chinese government does not want to lose power in any way. Also, China is aiming to make its own currency, the yen, available to the international digital market by 2022, and it does not want any competition. Reason number three, one of the advantages of cryptocurrencies is that transactions can be performed completely anonymously. It goes without saying that that has facilitated a lot of criminal offenses and money laundering operations. However, regardless of their criminal nature, sometimes these transactions are huge and the Chinese government wants to be able to control them. So obviously, by banning cryptocurrencies, the government ensures that such transactions are no longer performed anonymously. Reason number four, Recently Xi Jinping declared that it is time to redistribute their excessive fortunes, which means that China is now enacting a whole set of legislation aimed to tax the richest part of the population. And so as many people use Bitcoins for transactions as a way to hide their actual patrimony, it becomes some sort of safe haven, which the Chinese government wants to eliminate, because so many people buy Bitcoins or use coins to make transactions to actually keep the real wealth from showing up, thus avoiding taxation. Having said that, it is unrealistic to believe that people will no longer own Bitcoins in China. But the process of creating and extracting such cryptocurrencies, known as mining, will be completely banned. However, even though it can't be taken at face value, China's environmental concerns relating to cryptocurrencies are not unfounded. And here I'd like to remind you briefly how bitcoin mining works. We've talked about how solving the mathematical puzzles requires these powerful computers to consume an insane amount of energy. And as the business becomes more lucrative and competitive, more and more powerful computers are needed to solve these equations, which means consuming even more energy. And as I pointed out at the beginning, bitcoin mining consumes non renewable energy sources such as coal, the dirtiest fossil fuel possibly. And mining produces more energy consumption each year than a middle sized state like Malaysia or Sweden. So my point is that Chinese concerns do fall in line with their aim to cut carbon emissions completely by 2060. But they're not the only reasons for their cryptocurrency ban. Think about it this now it has become very complex to solve these mathematical puzzles, and it's not easy at all to set up a mining company and start actually mining and be competitive in the business. But miners that I know of literally started off in their garage to then move on to bigger facilities, preferably in places where energy costs are cheaper. And if we think of the Chinese population, and to the fact that China is the country where there is the highest number of people with access to a computer or the Internet. If anyone who wanted to mine cryptocurrencies or start a mining business actually did it, then the potential damage on the environment would be disastrous. I discussed this matter pretty recently with a friend who's a fierce environmental activist and was really, really outraged that I even had doubts on whether bitcoins and in particular cryptocurrencies are ethical or not. She calls them, you know, miners. She calls them environmental criminals. And I really do see her point, but for some reason I thought that her vision was also incomplete. And so I needed to research more. And now that I had to do a professional legal research on the matter. I actually had a chance to talk to some real miners and some bitcoin investors and I reckon that the issue is really nuanced. Anyways, I may or may not write more about it in the future just because I learned a lot of stuff due to this research that I had to do for this case. And so I would really appreciated it if if you wanted to read my articles in case I do publish some stuff. But for the love of speculation, I wanted to offer some arguments for bitcoin supporters because here we encourage a real contradictory so please cryptocurrency lovers play on. Speak to me. I really, really want to know your side of the story. In the meantime, it has been said that cryptocurrencies could, in theory, transform finance, and that is not necessarily a bad thing. We've seen how cryptocurrencies are not controlled by governments and they don't pass through any banks. We are aware now that our prominently capitalistic economic system does not work anymore. So some people genuinely see cryptocurrencies as an opportun opportunity to transform our financial system. And while some traditional economists are terrified that bitcoin and other cryptocurrencies might completely destroy our current system, well, that might not be necessarily a bad thing to find new ways to work out finance. However, when I was talking about it with Ruggiero, he made a comment that I thought was really smart. Yes, of course crypto isn't controlled by government or banks, and that's not necessarily a bad thing. But who's going to protect the investors in the event of a collapse? As I mentioned before, there are predictions indicating that bitcoins is going to do really well in the following months. But really no one is going to know what's going to happen with bitcoins and other cryptocurrencies tomorrow or in a week from now, or in months from now. So investing in cryptocurrencies might be compared with being in the jungle. It's cool, but. But if something happens, you might strive to survive it. I read an article on the Financial Times that actually said that nowadays big investors have a tendency to invest more in bitcoins rather than gold when they're fearing the inflection, which is huge, of course. But some experts in the article mentioned that this move is extremely risky because this kind of market cryptocurrencies is volatile by definition. And actually I read another article on Bloomberg talking about how some investors and actually some cryptocurrency professionals, such as miners are known for experiencing mental health issues as a result of the ups and downs that the value of cryptocurrencies encounters on a regular basis. And I guess if you've invested even a very small sum of money in cryptocurrencies, you may know what I'm talking about. About there is an incredible euphoria and happiness when the value of the currency is high, and then peaks of depression when it goes down again. And so cryptocurrency investments have been linked to deterioration of mental health and isolation, in spite of their massively lucrative potential. A second important argument in favor of cryptocurrencies is that the impact of regular general financial transaction on the environment is actually also huge. And so why demonize cryptocurrencies as much as we do if we're okay with current financial mechanisms which have a huge impact on the environment? Anyways, I remember researching and asking my brother, Ruggero, my friends, when is it gonna end? Is there an end to bitcoin? And while that is not the point at all, there actually is a set number of bitcoin that can be mined. Apparently that is 21 million. And at the current rate, that will be reached in 21:40, when all of this will be over. But of course, since we cannot predict how bitcoin is going to go next week or next month, we can't think that much in advance. So in the meantime, until 2140, the real question how can we make cryptocurrencies more environmentally sustainable? How can they be more in line with the objectives of the Paris Agreements and with the outcomes of COP26? Well, that is the question, and I don't have a feasible answer for that. But if we honestly believe that cryptocurrencies can change the economy, then we need to answer this question. Because at this rhythm, cryptocurrencies are not environmentally sustainable, not even in the medium run. Now, I am not implying in any way that cryptocurrency investors or miners are bad people. In fact, I know that single miners and single mining companies are looking for ways to do their work in more environmentally sustainable ways. But sometimes cryptocurrency investors and big investors that actually invest in mining companies aren't aware of the damage that they're actually doing, or simply they don't care. They don't want the company to consume less, they just want the profit. And so they want to make the company work in the more efficient way, according to them, which is also often the very least environmentally sustainable. But if you really are a believer that Cryptocurrencies can change our economy for the better. There are some that are more environmentally sustainable than bitcoin and I'm going to just briefly mention them here, but I'm going to make sure that I write a post where you can read their names so that if you wanted to, you could invest in them. One of them is Kia. Then there's Yota Cardano. I'm sorry, I don't know if I'm pronouncing it well, Nano and Solarcoin. Anyways, regardless of whether you're a bitcoin investor, a miner, or just a regular person, I'd like to share some useful tips on what we can actually do to contribute to help the environment. Especially these days. We hear a lot of information about COP 26 and all that, but personally sometimes I feel overwhelmed and useless, which is kind of an excuse for me to not do enough. And so I asked to my followers on Instagram about how they actually contribute to reduce their impact on the environment and the answers that I've got were amazing. I want to share them with you all so that maybe you can get expired as much as I did. Number one, trying to swap products that we normally use to sustainable ones. Shampoo bars, deodorants out of jars, reusable makeup removers. There are actually sections of our regular supermarkets that sell this kind of stuff and I didn't know that. Number two, flying less. But if you do fly, then prefer offset flights, which means that you can choose to pay an extra fees on top of the flight cost which is donated to a carbon offset scheme. And so the next time you do fly, maybe you can consider doing that cutting your meat intake. Because one of the quickest ways we can lower our collective greenhouse gas emissions, it's to eat less meat. I'm sorry. Number four, actually go on the streets and protest for our governments to do something concrete. Number five, composting food waste. Number six, monthly donations to a CO2 capture company. And I'm gonna list list some in the post, so keep an eye on that. And also switch banks. There are more environmentally sustainable banks and I'm gonna list some in there too. So what do you think? Are you ready to invest all of your savings in cryptocurrencies or are you off to march for the environment or both. As always, send me a message or leave me a comment and let me know what you think. And also let me know if there's any topic that you'd like to see on this podcast. I am extremely grateful to my brother Ruggiero for helping me writing this episode. You are the best, the smartest person I know and my better off. Grazia. Ciao for now.
