Sam Bankman-Fried, CEO of crypto derivatives exchange FTX, drew the community’s ire today after he singled out Bitcoin and Ethereum as the two most energy-consuming blockchains.
Speaking to CNBC’s SquawkBox, Bankman-Fried announced that his trading platform has gone carbon neutral as part of its “FTX Climate” initiative. To achieve this, the company has committed “at least $1 million to permanent carbon capture and storage and we’ve given about $500k to other research efforts aimed at mitigating climate change.”
“I think it’s the responsible thing to do to mitigate—to the extent you can—the short-term impact,” Bankman-Fried told CNBC.
“It’s the responsible thing to do to mitigate to the extent you can,” says @SBF_Alameda on @FTX_Official climate pledge. “There are only two major cryptocurrencies that have large energy usage. It’s #bitcoin and #ethereum…proof of work is where all the energy usage comes from.” pic.twitter.com/lxNV7aIDxn
— Squawk Box (@SquawkCNBC) July 27, 2021
However, he also pointed out that it’s “not free” to try and offset the transactions FTX is facilitating, and simultaneously singled out Bitcoin and Ethereum (at least for the time being) as the two most energy-hungry cryptocurrencies.
“I think the other side of this is that when you look at the energy uses of cryptocurrencies, there are only two major cryptocurrencies that have large energy usage—it’s Bitcoin and Ethereum, now they are the two biggest. The reason is that those are the two proof-of-work (PoW) currencies, and proof-of-work is where all the energy usage comes from,” Bankman-Fried argued.
He added that Ethereum is currently transitioning to a proof-of-stake (PoS) protocol—which should require much less electricity—” which will make it down to just Bitcoin as a big energy user.”
Bitcoin faithful aren’t happy
While Bankman-Fried did not voice any explicit criticism toward Bitcoin’s energy consumption, the crypto community quickly picked up on the obvious implication.
“Lost a lot of respect for [Sam Bankman-fried] with him trying to shit on PoW,” one of the first commenters replied. “Ok delist Bitcoin and FTX disappears…let’s go,” another one added.
Meanwhile, many users have pointed out that high levels of energy consumption is actually what allows PoW-based blockchain to remain decentralized and secure—a notion that Bankman-Fried himself echoed after the interview.
“There are lots of advantages to PoW. Its security is less reliant on historical ordering than PoS, it’s in some cases harder to quickly buy scale to attack, harder to hedge attacks, etc,” he replied. “That being said, it does use a lot of energy, and that does have a cost. I’m not trying to make claims about whether that cost is worth it—just that it’s a fact that most of the impact comes from it.”
