FTX CEO Faces Backlash For Bitcoin And Ethereum Energy Comments

CEO of crypto derivatives exchange Sam Bankman-Fried drew angry reactions from the crypto community after he singled out Bitcoin and Ethereum, stating that they were the most energy-consuming blockchains in the space. 

Bankman-Fried made these comments while in conversation with CNBC’s SquawkBox while discussing the FTX derivatives exchange becoming carbon neutral under the FTX Climate initiative. 

FTX Fully Carbon Neutral 

Bankman-Fried had earlier taken to Twitter to announce that the FTX derivatives exchange had gone carbon neutral. Going further, he outlined the efforts taken to achieve this feat, stating that FTX had donated $1 Million towards the purchase of 100,000 tons of carbon offsets that help to neutralize the impact of the exchange’s blockchain activity.

However, the FTX exchange is going further and finding other ways, such as committing $1 Million towards permanent carbon capture and storage and another $500,000 towards other research focusing on mitigating the effects of climate change. 

“I think it’s the responsible thing to do to mitigate—to the extent you can—the short-term impact. 

Bitcoin And Ethereum Energy Guzzlers 

However, Bankfan-Fried stated that offsetting the transactions FTX facilitates is not free and singled out Bitcoin and Ethereum for being the two most energy-hungry cryptocurrencies. He added that Ethereum would be transitioning to the Proof-of-Stake protocol, which will consume significantly less energy, leaving only Bitcoin as the most energy-hungry cryptocurrency. 

“I think the other side of this is that when you look at the energy uses of cryptocurrencies, and 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,” commented Bankman-Fried.

Community Backlash 

Despite not criticizing Bitcoin or voice any other criticism towards its energy consumption, the Bitcoin community wasn’t too happy with the comments and lashed out at him, with users voicing their displeasure over Twitter. One user commented,

“Lost a lot of respect for [Sam Bankman-fried] with him trying to **** on PoW.”

While another added, “Ok, delist Bitcoin and FTX disappears… let’s go.”

Users also pointed out that it is the high energy consumption that allows Proof-of-Work blockchains to remain secure and decentralized. Bankman-Fried seemed to agree with this opinion by stating, 

“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. 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.”

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Publication date: 
07/28/2021 - 05:20
Author: 
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