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

Some examples of ‘kindness’ rocks that were painted by members of the Boys and Girls Club in Rimbey. photo submitted
The ‘kindness rock snake’ continues to take shape in Rimbey

Residents are asked to contribute a ‘kindness rock’ to a project near the Blindman Youth Action Building

The City of Red Deer sits at 249 active cases of the virus, after hitting a peak of 565 active cases on Feb. 22. (Black Press file image)
Red Deer down to 119 active COVID-19 cases

Province identifies 179 new cases Saturday

Member Terry Parsons’ custom built track vehicle.
Forestburg’s Area 53 Racetrack gears up for action-packed season

Site will also host a portion of the ‘Miles of Mayhem’ event in July

Image/ Metro Creative Connection
Rimbey Municipal Library struggling to finish expansion amid construction cost boom

‘We found that the cost is at least $100,000 more than anticipated.’

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

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

Denmark’s Christian Eriksen receives medical attention after collapsing during the Euro 2020 soccer championship group B match between Denmark and Finland at Parken stadium in Copenhagen, Saturday, June 12, 2021. (AP Photo/Martin Meissner, Pool)
Christian Eriksen in stable condition, Euro 2020 match resumes

Eriksen was given chest compressions after collapsing on the field during a European Championship

As stories of the horrors of residential schools circulate after the Tk’emlups te Secwepemc First Nation announced it had located what are believed to be the remains of 215 children, Grand Chief Stewart Phillip of the Union of B.C. Indian Chiefs said he feels a connection with the former students. THE CANADIAN PRESS/Darryl Dyck
2 sides of the same coin: Ex-foster kids identify with residential school survivors

Grand Chief Stewart Phillip says the child welfare system takes Indigenous children from their families

Airport ground crew offload a plane carrying just under 300,000 doses of the single-shot Johnson & Johnson COVID-19 vaccine which is developed by the Janssen Pharmaceutical Companies at Pearson International Airport during the COVID-19 pandemic in Toronto on Wednesday, April 28, 2021. THE CANADIAN PRESS/Nathan Denette
1st batch of Johnson & Johnson vaccines won’t be released in Canada over quality concerns

The vaccines were quarantined in April before they were distributed to provinces

Grade 12 students at Wetaskiwin Composite High School took place in the annual water fight off school property on June 11, 2021. Shaela Dansereau/ Pipestone Flyer.
Graduating students in Wetaskiwin throw water fight after being told it could result in suspension

Students were told their participation could result in them being barred from graduation ceremonies.

The arrest south of Winnipeg occurred before Bernier was to arrive at a protest in the city. (Twitter/Maxime Bernier)
Maxime Bernier arrested following anti-rules rallies in Manitoba: RCMP

He’s been charged with exceeding public gathering limits and violating Manitoba’s requirement to self-isolate

Most Read