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

Eric White’s roadside farm stand in Metchosin sits stocked with produce. (Photo courtesy of Eric White)
Fledgling Metchosin farmer frustrated by thefts from stand

Eric White said every dollar made at the roadside helps sustain his farm

Greater father involvement in the home leads to improved childhood development and increased marital satisfaction, says expert. (Black Press Media file photo)
University of Victoria researcher finds lack of father involvement a drag on gender equality

Working women still taking on most child and household duties in Canada

Emergency health services treated a person after they were blocking traffic at the intersection of Fort and Douglas Streets on June 17. (Evert Lindquist/ News Staff)
Victoria intersection traffic returns to normal after protester blocked roadway

A person in a motorized wheelchair was blocking the intersection at Fort and Douglas Streets

New COVID-19 cases on Vancouver Island by local health area for the week of June 6-12. (B.C. Centre for Disease Control image)
New COVID-19 cases up on Island, but health officials say trends going right way

There were 22 new COVID-19 cases in Greater Victoria last week after just four the week before

Helicopter crew members onboard HMCS Halifax conduct inflight refueling during Operation Reassurance in the Mediterranean Sea in 2020. Some of the military choppers flying around Greater Victoria recently are taking part in a special ops training exercise. (Photo by Cpl. Braden Trudeau/Trinity-Formation Imaging Services)
Special Ops exercise brings influx of helicopters to Victoria

Ontario-based air force unit comes to Victoria to train over ocean

People line up to get their COVID-19 vaccine at a vaccination centre, Thursday, June 10, 2021 in Montreal. THE CANADIAN PRESS/Ryan Remiorz
Vaccines, low COVID case counts increase Father’s Day hope, but risk is still there

Expert says people will have to do their own risk calculus before popping in on Papa

(Black Press Media file photo)
POLL: When was the last time you visited the mainland?

The films are again lighting the screens at local theatres, the wine… Continue reading

Anyone with information on any of these individuals is asked to call 1-800-222-TIPS (8477) or visit the website victoriacrimestoppers.ca for more information.
Greater Victoria Crime Stoppers wanted list for the week of June 15

Greater Victoria Crime Stoppers is seeking the public’s help in locating the… Continue reading

The Co-op gas station at Whiskey Creek is burning after a camper van exploded while refueling just before 4 p.m. on Thursday, June 17, 2021. (FACEBOOK PHOTO)
Exploding camper van torches Highway 4 gas station between Qualicum Beach and Port Alberni

Highway traffic blocked after Whiskey Creek gas station erupts into flames

Helen Austin performing with Trent Freeman at the 2018 Vancouver Island MusicFest. Austin is one of the many performers listed for the 2021 event.
Vancouver Island MusicFest goes virtual for 2021

Black Press to stream 25 hours of programming July 9-11

FILE – A science class at L.A. Matheson Secondary in Surrey, B.C. on March 12, 2021. (Lauren Collins/Surrey Now Leader)
Teachers’ union wants more COVID transmission data as B.C. prepares for back-to-school

BCTF says that details will be important as province works on plan for September

Provincial health officer Dr. Bonnie Henry outlines B.C.’s COVID-19 restart plan, May 25, 2021, including larger gatherings and a possible easing of mandatory masks on July 1. (B.C. government photo)
B.C. records 120 new COVID-19 cases, second vaccines accelerating

Lower Pfizer deliveries for early July, Moderna shipments up

A Heffley Creek peacock caught not one - but two - lifts on a logging truck this month. (Photo submitted)
Heffley Creek-area peacock hops logging trucks in search of love

Peacock hitched two lifts in the past month

The Calgary skyline is seen on Friday, Sept. 15, 2017. THE CANADIAN PRESS/Jeff McIntosh
2 deaths from COVID-19 Delta variant in Alberta, 1 patient was fully immunized

Kerry Williamson with Alberta Health Services says the patients likely acquired the virus in the hospital

Most Read