Bank of Canada deputy governor Timothy Lane delivers a keynote at the Ottawa Board of Trade in Ottawa, on Thursday, Dec. 5, 2019. THE CANADIAN PRESS/Justin Tang

Bank of Canada deputy governor Timothy Lane delivers a keynote at the Ottawa Board of Trade in Ottawa, on Thursday, Dec. 5, 2019. THE CANADIAN PRESS/Justin Tang

Bank of Canada digital currency would be greener than Bitcoin, deputy says

Elon Musk said that Tesla would suspend vehicle purchases using Bitcoin out of environmental concern

A senior official at the Bank of Canada says any digital currency the central bank may offer in the future would be more environmentally friendly than Bitcoin and other rivals.

Deputy governor Timothy Lane said Wedneday that the central bank has looked at the environmental impacts as part of its research into creating its own digital offering.

Mining Bitcoin consumes more energy annually than some countries like the Netherlands, according to the Cambridge Bitcoin Electricity Consumption Index, as computers around the world solve complex mathematical equations to unearth one of the finite digital coins.

Those same computers are also running around the world to update Bitcoin’s decentralized ledger so transactions can happen as easily as two people exchanging a loonie.

Lane argued that energy-intensive process is integral to public’s trust in the value of Bitcoin and other cryptocurrencies.

He said the central bank wouldn’t need to build a similar kind of trust in a possible digital currency because Canadians already trust the Bank of Canada and the bills it prints.

“Clearly, there’s a high degree of public trust in what we’re offering, and so when we think about a central bank digital currency, that trust is an important thing we’re bringing to the table,” Lane said on a panel hosted by the Canadian Chamber of Commerce.

“That, of course, means that we wouldn’t have to rely on those environmentally, very wasteful methods of mining technologies that we’ve seen with cryptocurrencies.”

Lane’s fellow panelists noted that there is a push to use more clean, renewable energy in the mining of Bitcoin.

Two weeks ago, one of the most prominent investors, Elon Musk, said in a statement that his company Tesla would suspend vehicle purchases using Bitcoin out of concern for the increasing use of fossil fuels, particularly coal, for mining and transactions.

On Monday, Musk tweeted that he had spoken with Bitcoin miners in North America to publish their current and planned usage of renewable energy and ask their counterparts worldwide to do the same.

“You can substitute clean energy for the dirty energy, but of course, clean energy also has other uses,” Lane said. “If you use an extra gigawatt of clean energy to mine Bitcoins, that’s a gigawatt less that is being used to for some useful purpose.”

And while there is a cost and impact from printing polymer bank notes, Lane said it is a fraction of the value of the bill itself being exchanged across Canada.

The day those bills are no longer considered king for everyday transactions and replaced by privately backed cryptocurrencies is when the central bank expects it would have to step in with its own digital currency.

But first it would need authority from Parliament to do so. Lane said the bank doesn’t yet see a need for it to offer its own digital currency.

The Bank of Canada has been working on what it is calling a “digital loonie” for some time, and now looking at the what attributes it should have and how it would connect with the rest of the financial system, Lane said.

The central bank’s latest review of the risks to the country’s financial system included a section on cryptoassets, whose market capitalization jumped from US$200 billion at the start of 2020 to now over US$2 trillion as average investors were able to start buying exchange-traded funds holding Bitcoin and Ethereum, among other cryptocurrencies.

While cryptocurrencies and funds have a small footprint in markets and daily transactions in Canada, the bank noted a risk about the potential for wide adoption of private “stablecoins,” named so because their value is less volatile.

The review said their adoption could make it difficult for the Bank of Canada to keep inflation on target and act as a lender of last resort, unless they were “backed exclusively by Canadian dollars.”

READ MORE: Bank of Canada warns of rising risks from household debt, and a hot housing market

Jordan Press, The Canadian Press


Like us on Facebook and follow us on Twitter.

cryptocurrencyeconomy

Just Posted

(File photo)
Poverty reduction survey identifies 10 poverty themes

Poverty reduction plan will be finalized in July 2021

Nanaimo-Ladysmith MP Paul Manly says he has no intentions of leaving the Green Party. (House of Commons image)
Island Green MPs have “no intention” of leaving the party after ‘heartbreaking’ departure

Manly, May only remaining Green MPs after Jenica Atwin left for the Liberals over internal disputes

New COVID-19 cases on Vancouver Island by local health area for the week of May 30-June 5. (B.C. Centre for Disease Control image)
COVID-19 cases drop again almost everywhere on Vancouver Island

Nanaimo had four new cases last week, down from 22 the week before

Justine Keefer’s Cedar Elementary School Grade 6/7 class put together a student paper, as part of a school project. Pictured here Andrew Gregory, left, Felix Leduc, Addison Armstrong, Lucia Walker and Anise Dick. (Karl Yu/News Bulletin)
Cedar Elementary School students create their own newspaper

Grade 6/7 class publishes Wolf Pack News as part of language arts and social studies

Évangeline Laforest and Oscar McClements’ invention La Méduse (the Jellyfish) removes oil from the ocean. The invention was one of 15 out of 700 inventions submitted to the Natural Sciences and Engineering Research Council of Canada’s Little Inventors contest. (Cole Schisler photo)
‘Little Inventors’ from Ladysmith showcased in national science challenge

Évangeline Laforest and Oscar McClements were one of 15 finalists in the Little Inventors Challenge

At an outdoor drive-in convocation ceremony, Mount Royal University bestows an honorary Doctor of Laws on Blackfoot Elder and residential school survivor Clarence Wolfleg in Calgary on Tuesday, June 8, 2021. THE CANADIAN PRESS/Jeff McIntosh
‘You didn’t get the best of me’: Residential school survivor gets honorary doctorate

Clarence Wolfleg receives honorary doctorate from Mount Royal University, the highest honour the school gives out

The Great Ogopogo Bathtub Race has been held in Summerland as a fundraising event. Do you know which Canadian city introduced this sport? (Black Press file photo)
QUIZ: A summer’s day at the water

How much do you know about boats, lakes and water?

Two-year-old Ivy McLeod laughs while playing with Lucky the puppy outside their Chilliwack home on Thursday, June 10, 2021. (Jenna Hauck/ Chilliwack Progress)
VIDEO: B.C. family finds ‘perfect’ puppy with limb difference for 2-year-old Ivy

Ivy has special bond with Lucky the puppy who was also born with limb difference

A million-dollar ticket was sold to an individual in Vernon from the Lotto Max draw Friday, June 11, 2021. (Photo courtesy of BCLC)
Lottery ticket worth $1 million sold in Vernon

One lucky individual holds one of 20 tickets worth $1 million from Friday’s Lotto Max draw

“65 years, I’ve carried the stories in my mind and live it every day,” says Jack Kruger. (Athena Bonneau)
‘Maybe this time they will listen’: Survivor shares stories from B.C. residential school

Jack Kruger, living in Syilx territory, wasn’t surprised by news of 215 children’s remains found on the grounds of the former Kamloops Indian Residential School

A logging truck carries its load down the Elaho Valley near in Squamish, B.C. in this file photo. THE CANADIAN PRESS/Chuck Stoody
Squamish Nation calls for old-growth logging moratorium in its territory

The nation says 44% of old-growth forests in its 6,900-square kilometre territory are protected while the rest remain at risk

Flowers and cards are left at a makeshift memorial at a monument outside the former Kamloops Indian Residential School to honour the 215 children whose remains are believed to have been discovered buried near the city in Kamloops, B.C., on Monday, May 31, 2021. THE CANADIAN PRESS/Darryl Dyck
‘Pick a Sunday:’ Indigenous leaders ask Catholics to stay home, push for apology

Indigenous leaders are calling on Catholics to stand in solidarity with residential school survivors by not attending church services

“They will never be forgotten, every child matters,” says Sioux Valley Chief Jennifer Bone in a video statement June 1. (Screen grab)
104 ‘potential graves’ detected at site of former residential school in Manitoba

Sioux Valley Dakota Nation working to identify, repatriate students buried near former Brandon residential school

Most Read