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

Special weather statement issued for Fraser Valley as first summer heat arrives June 20, 2021, and set to persist all week. (Photo by James Day on Unsplash)
Second day of hot temperatures rippling across Fraser Valley

Communities from Abbotsford to Hope will see daytime high maximum temps of 32 degrees

Harrison Hot Springs country singer Todd Richard poses for a photo with Mission firefighters. (Photo/Sarah Plawutski)
VIDEO: Harrison country artist Todd Richard plans for a busy, rockin’ summer

Richard and his band look to live shows as restrictions start to lift

FILE – Perry Bellegarde, National Chief of the Assembly of First Nations, takes part in an event on Parliament Hill in Ottawa on Tuesday, July 7, 2020. THE CANADIAN PRESS/Sean Kilpatrick
Indigenous Peoples Day must be a ‘call to action’, says Assembly of First Nations chief

Discovery of children at Kamloops residential school site must lead to change, Perry Bellegarde says

The theme for this year’s Fraser Valley Regional Library Summer Reading Club is “Crack the Case” and Katie Burns, community librarian at the Chilliwack Library, is encouraging people of all ages to sign up. She is seen here at the Chilliwack Library on Friday, June 18, 2021. (Jenna Hauck/ Chilliwack Progress)
Crack the case, read, win prizes with FVRL Summer Reading Club

‘Immerse yourself in other worlds and have a bit of fun while you do it,’ says Chilliwack librarian

Marco Mendicino, Minister of Immigration, Refugees and Citizenship during a press conference in Ottawa on Thursday, May 13, 2021. THE CANADIAN PRESS/Sean Kilpatrick
Canada to welcome 45,000 refugees this year, says immigration minister

Canada plans to increase persons admitted from 23,500 to 45,000 and expedite permanent residency applications

Indigenous rights and climate activists gathered outside Liberty Mutual’s office in Vancouver to pressure the insurance giant to stop covering Trans Mountain. (Photo by Andrew Larigakis)
Activists work to ensure Trans Mountain won’t get insurance

Global campaign urging insurance providers to stay away from Canadian pipeline project

In the first election with public money replacing corporate or union donations, B.C. Liberal leader Andrew Wilkinson, B.C. Greens leader Sonia Furstenau and B.C. NDP leader John Horgan take part in election debate at the University of B.C., Oct. 13, 2020. (THE CANADIAN PRESS)
B.C. MLAs ponder 2022 ‘sunset’ of subsidy for political parties

NDP, B.C. Fed call for increase, B.C. Liberals have no comment

Emergency crews shut down White Rock’s Five Corners district on Feb. 19, 2020 following an assault. (File photo)
Trial underway in February 2020 death of White Rock senior

Ross Banner charged with manslaughter following Five Corners altercation

Join Black Press Media and Do Some Good
Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Investigators use a bucket to help recover human remains at a home burned in the Camp fire, Thursday, Nov. 15, 2018, in Magalia, Calif. Many of the missing in the deadly Northern California wildfire are elderly residents in Magalia, a forested town of about 11,000 north of the destroyed town of Paradise. (AP Photo/John Locher)
‘Forever War’ with fire has California battling forests instead

Five of the state’s largest-ever blazes seared California last year, as authorities tackle prevention

Tokyo 2020 President Seiko Hashimoto and IOC President Thomas Bach, on a screen, speak during a five=party online meeting at Harumi Island Triton Square Tower Y in Tokyo Monday, June 21, 2021. The Tokyo Olympics will allow some local fans to attend when the games open in just over a month, Tokyo organizing committee officials and the IOC said on Monday. (Rodrigo Reyes Marin/Pool Photo via AP)
Tokyo Olympics to allow Japanese fans only, with strict limits

Organizers set a limit of 50% capacity — up to a maximum of 10,000 fans

Most Read