Why brands must be wary of the silent sustainability cost of certain cryptocurrencies

04 June, 2021 Share socially

Last month Elon Musk announced that Tesla would no longer accept Bitcoin in exchange for consumer sales. After Musk’s previous support for Bitcoin and other cryptocurrencies, this decision left many surprised. Although the environmental impact of Bitcoin and other cryptocurrencies hasn’t been kept a secret, Musk’s dismissal of Bitcoin has elevated the issue to front page news, with many brands now also taking a stand against Bitcoin and bringing it to the forefront of consumer awareness.

Bitcoin's ascent to the world’s ninth most valuable asset has been rapid. In little over a decade the cryptocurrency has disrupted the financial world and offered individuals and businesses new ways to invest and consume. Despite its successes, there are a number of pain points for consumers and brands alike. Bitcoin is considered by some a ‘dirty currency’ and apparently uses more electricity as the whole of Argentina. Although analysts claim that the technology will soon mostly be powered by renewable energy sources, the impact of several cryptocurrencies on the environment will be detrimental in the interim, campaigners claim.

Tesla is not alone in its condemnation of Bitcoin, and environmental charities have already begun to follow suit. Greenpeace USA followed in the footsteps of Tesla by announcing it would no longer be accepting donations via Bitcoin due to the large carbon footprint involved in such monetary transactions. The UK arm of the organisation - the most recognised environmental group in the world - is also expected to make a similar announcement shortly. Other high-profile organisations and brands including Friends of the Earth, an international community dedicated to protecting the planet, are also expected to follow suit.

In a world where consumer purchases and habits are increasingly driven by our concerns for the environment, this is a worrying situation for the brand of Bitcoin. Now that large global companies and individuals have been so vocal in their disapproval of Bitcoin, brands who continue to use Bitcoin for sales and transactions may be challenged and questioned by the consumer. If a consumer sees a brand behaving, in their opinion, unsustainably or in a damaging way, they are more likely to take their custom elsewhere to a brand who better aligns with their values and concerns for the environment.

Some may say that Tesla were ahead of the curve in renouncing Bitcoin and consumers will reward the brand for their future-facing attitude and environmental concerns. In the 2020 FutureBrand Index Tesla entered the Top 100 brands for the first time. We expect more movement for the brand in the upcoming FutureBrand Index 2021, due this summer.