If you’ve never heard of cryptocurrencies before, stop now. Hold on to whatever innocence you’ve maintained thus far, and just enjoy your day. If you have, it was probably explained to you on a bad date with some over-caffeinated dude who watches too much Joe Rogan and won’t stop texting you.
Don’t worry – I won’t try to explain it today. But you should know that its boosters and their energy-consuming supercomputers have captured American politics, and they’re hoping their industry will grow to immense proportions over the next four years.
In fact, these infamously anti-government crypto-bros were perhaps the biggest contributors to the 2024 presidential election. The crypto industry pumped more than $200 million in direct donations and hundreds of millions more into industry Super PACs. Like any big donor group, they’re now expecting massive returns on their investments.
Their biggest libertarian dream is not only for the industry to expand, but for the US government to step in and subsidise their speculative investments by trading US gold reserves to buy a national reserve of billions of bitcoins.
You should also know that because these digital crypto-currencies require massive amounts of inter-connected computer power to perform thousands of complex calculations every time they want to “mine” a new “coin”, they soak up electricity like a sponge. Admittedly, some are better than others. But just like any type of unregulated mining, the industry in general is an environmental disaster.
Right now, the Cambridge Centre for Alternative Finance projects that without any further growth, the electricity demand of all these computers mining and trading bitcoins alone could already reach 172 terawatt hours this year – that’s greater than the annual electricity demand of Poland. And that is assuming no further growth or taking account of any of the hundreds of other cryptocurrencies online.
Since 2021, a lion’s share of this complex computing has been happening in the USA, especially in Texas. The Energy Information Agency believes it’s putting a massive strain on local power grids, especially at peak times, and estimates that it could represent up to 2.3 per cent of national electricity consumption.
As crypto-mania grows, so too will this terrible energy bill. And so too, it seems, will its political promoters.
If you didn’t watch Trump’s two-part inauguration, you might have missed “Paster Zo”, more formally known as Pastor Lorenzo Sewell, who launched his very own cryptocurrency – quite literally from church – that rocketed to anestimated value of $4.5 million, but crashed and disappeared four hours later. It has now lost 93 per cent of its value, as have many of its everyday investors, with some estimates that individual investors may have lost tens of thousands of dollars each.
This came only days after the $Trump meme-coin launched, which could become one of his most successful money makers. The coin was launched last week while Trump’s inner circle attended an invite-only crypto ball in DC. Soon after, many of the party-goers were boosting the coin online, as were his family and the president himself. Trump launched the meme coin by inviting his followers on X to “join my very special Trump Community”.
The meme-coin, which is 80 per cent owned by two of Trump’s shell companies, rose by more than 600 per cent in its first day. It kept climbing as average Americans joined the weekend pile-on. By Sunday night, the price of a single coin had risen from under $10 when it opened to just under $75, reaching a market capitalisation of more than $15 billion.
Due to his shell company’s 80 per cent share, Axios analysts estimated that the meme-coin could account for almost 90 per cent of Trump’s net worth. Over the course of a weekend, a slew of crypto-boosters and everyday fans had made him an instant blockchain billionaire.
That is, until the price dropped dramatically. Late on Sunday night, the meme-coin lost half of its market value within an hour. A wave of major investors sold all at the same time, while the Trump family welcomed the newest family meme-coin, $Melania. Those who knew about the coin’s launch, who invested early and calculated when to time their exit correctly, may have made millions in profits.
Analysis of the Solana blockchain suggests this to be the case, and that many others, especially the everyday traders following on Twitter or Truth Social, may have lost millions as well.
As such, in just the first week of his presidency, Trump and his inner circle of bitcoin bulls had just tried and tested a new and potentially far more lucrative form of energy-hungry political extraction.
What we do know is that the public explosion of bitcoin and cryptocurrencies globally is already destabilising local power grids, and will likely expand its already gargantuan environmental footprint.
What we don’t know is whether or not it may also become a destabilising force for national sovereignty – as well as the climate.
