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FTX and the climate crisis
A symptom of a system driving us towards disaster
The collapse of the FTX cryptocurrency exchangeis a system flaw of the rich world. A world that is in hock to the financialisation of everything, promotes cryptocurrencies that want to commodify the entirety of the physical and virtual worlds, enables a billionaire class who we give free rein to solve the world’s problems, and requires fossil fuels and the destruction of nature to perpetuate it.
At the heart of crypto is the idea that everything has monetary value and can be assigned ownership. There are NFTs for artwork, tweets, the musings of Paris Hilton and cartoon rocks. Even in the virtual realm hundreds of thousands of dollars of crypto are spent on purchasing land. This commodification of everything is leaving vulnerable people with nothing and causing suicide hotlines to top Reddit boards. This is all irrelevant to the pursuit of money. And not so different from the oil rushes in 19th and early 20th Century America that were merciless blood baths. In their wake we’ve been left with ecosystem destruction, melting glaciers and rising seas. Our planet cannot tolerate a system that values wealth creation above all else.
Not only is crypto wild speculation, socially useless and a solution in search of a problem, but it’s also a massive polluter. Bitcoin emits nearly as much carbon as Portugal. Coal power plants have started reopening around the world to satisfy crypto’s insane energy needs. The carbon footprint of a single Ethereum transaction used to be equivalent to 226,910 VISA transactions. The system now uses “proof of stake” which has reduced its energy costs. But transactions are still very inefficient compared with VISA. If the system gets larger the energy consumption will only get worse.
Crypto enthusiasts have been pushing Web3: making the world wide web decentralised using cryptocurrency and blockchains. Web3 is one branch of a larger set of technologies known as the Decentralised Web. The idea has many admirable goals: ending the monopolies of big tech companies, giving users control over their data, encoding values into the network and improving moderation. Decentralised technologies without blockchains and crypto are often more effective guarantors of decentralisation. Their communities rejected the approach of Web3 initiatives that sought growth through copious amounts of venture capital funding. But the flow of money into crypto supercharged Web3. Now it’s become almost synonymous with the entirety of the Decentralised Web and contaminated the brand.
The collapse of FTX has shined a light on Sam Bankman-Fried (SBF) and his indulgence by the system. Corporate media published glowing profiles. Writers suggested he could ensure the long-term future of humanity. Democrats were happy to accept his donations. Billionaires are too often held up as visionaries - the only ones who can solve the world’s problems. Never mind the extreme pollution or environmental destruction left in their wake.
FTX, crypto and billionaires are system flaws. Amassing huge amounts of money from the wild speculation and pointlessness of crypto is not a product of a healthy system. The gross inequality exemplified by billionaires is not a product of a healthy system full stop. Nature and the climate are buckling due to system pressures from unconstrained wealth creation and pollution. Like FTX and SBF we shouldn’t be surprised when it all comes crashing down.
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(About 41 minutes into the podcast)