With the lockout still in full swing and Manfred set to announce the delay of spring training, there isn’t much substantive news to excited about around the baseball world these days. That hasn’t stopped the Nationals, however, who have in the span of one week announced the BetMGM Sportsbook at Nationals Park (which has created quite the intense discussion) and, more recently, a sponsorship with cryptocurrency Terra that will rebrand the club space behind home plate and see the introduction of cryptocurrency transactions in the park as soon as 2023.
I had the audacity to have an unfavorable initial opinion about the cryptocurrency sponsorship on Twitter based on the general environmental impact of cryptocurrency, which led to far more of a backlash from faceless users with moon emojis in their username than I anticipated. Behind the personal attacks, however, I found a few attempts at legitimate conversation and decided to do a little more research into the subject. I’ll be the first to admit that my level of cryptocurrency knowledge was and remains basic, but I also firmly believe that that basic knowledge is all the average Nats fan needs to understand the contours of the nearly $40 million deal. While the environmental impact of a cryptocurrency like Terra is better than that of a cryptocurrency like Bitcoin, the Nationals could still be more transparent about those differences in order to educate the public about the environmental impacts of certain types of cryptocurrency and to do their part in standing up for the environment. Below, I provide a basic primer on cryptocurrency and its environmental impacts before listing a few ways the Nationals could improve this partnership. If you want only the Nats content and don’t need the crypto primer, scroll down closer to the end of the article.
(Important to note: This article concerns only the environmental impacts of cryptocurrency and how the Nationals can counteract both that reality and perception. There are very legitimate concerns about whether or not cryptocurrency more generally is a Ponzi scheme or fraud, particularly one that preys on those who may not have the money to risk in speculation. It has been used to defraud many people in the past—but I’ll leave you to come to your own conclusions on that minefield and save my own detailed opinions on that for another article. Tweet your opinions about that issue at your own risk.)
Wait wait wait, back up. What on earth is cryptocurrency?
Basically, cryptocurrency is a type of digital currency that is untethered, in most cases, to any central bank, government authority, or central regulation in the way that traditional currencies are. Cryptocurrency transactions are stored on the blockchain, a kind of digital ledger that gets its name from combining the “blocks” detailing transactions into a “chain” of the transaction history. Its lack of tether to any kind of central authority is an appeal to some as well as a significant risk, though it’s worth noting that Terra, as a “stablecoin,” pegs its value to the U.S. dollar. Types of cryptocurrency include Bitcoin, Ethereum, and the oft-ridiculed Dogecoin.
Okay, got it. How is it harmful to the environment? And how does this digital currency have any value?
These two questions are partially linked, believe it or not! Cryptocurrencies need to be “mined,” which refers to the process of validating a transaction in the blockchain. The two largest cryptocurrencies in the world, Bitcoin and Ethereum, use a process called “proof of work” to do so. Basically, a Bitcoin “miner” needs to validate a series of variables to confirm a transaction and then solve a little puzzle as quickly as possible to have their validation accepted (if you want more details on this “puzzle,” which is a very simplistic way of referring to it, read up here). If they solve the puzzle the fastest and get the validation, they receive that coin and therefore money. Solving this puzzle requires a ton of computing power—it’s not something that you can necessarily do by yourself on your personal laptop, for example—which means that computers are firing on all cylinders competing to solve the puzzle first and provide the proof of their work. The Cambridge Bitcoin Electricity Consumption Index estimates that these mining operations use energy at the rate of 125.13 terawatt-hours per year. For comparison, this is more terawatt-hours per year used than the entire country of Argentina.
The website Digiconomist has even more dire estimates: they estimate that the carbon footprint of Bitcoin mining is comparable to that of Kuwait; that the electrical energy used is comparable to Thailand (204.5 terawatt-hours per year); and that the electronic waste produced is comparable to that of the Netherlands. According to the same website, the electrical energy used in a single Bitcoin transaction is equivalent to the power consumption of the average U.S. household over 75.51 days and has the carbon footprint of approximately 2,319,298 VISA transactions.
Thankfully, as many, many, many people pointed out to me (both rudely and kindly), some crypocurrencies like Terra operate using a process called “proof of stake” to mine, which is much more energy efficient. In verifying the blockchain through proof of stake, a coin owner must “stake” some of their coins as collateral—that is, they lock some of their coins away so as to prove their trustworthiness in validating the blockchain. A person who has staked away a certain number of coins can become a validator and, instead of competing to solve the verification puzzle as quickly as possible, may be randomly selected to solve the puzzle and therefore does not need to do a trillion calculations as fast as possible. If the validator does not do their job correctly, their staked coins can be destroyed. But, if they’ve mined properly, they can get more coins, and the process continues. While Bitcoin continues to operate using the destructive proof of work process, many smaller cryptocurrencies (like Terra) use proof of stake, and the second largest cryptocurrency, Ethereum, is currently transitioning to the proof of stake process. The company estimates that they will use 99.5 percent less energy as a result.
So Terra isn’t harmful to the environment?
I didn’t say that. While proof of stake cryptocurrencies are inherently less harmful to the environment than proof of work cryptocurrencies, whether or not you believe they are harmful to the environment depends on your opinion as to whether or not cryptocurrencies should exist at all. If you assume cryptocurrency is some positive force for good, you may be willing to overlook any output in energy—whether relative to the energy output of Thailand or not—because of your belief that it’s here to stay and should be considered just another contributor to climate change that we’ll need to live with, à la the environmental impact of certain modes of transportation we can’t imagine living without. If, however, you believe that cryptocurrency is inherently harmful and should not exist (see: Ponzi schemes and speculative bubbles), then any kind of environmental impact from cryptocurrency may be untenable to you. If you believe that cryptocurrency shouldn’t exist, then the false equivalencies of the environmental impact of a VISA card versus cryptocurrency or of a newspaper versus cryptocurrency do not hold water. In short, it depends on your perspective on the validity of cryptocurrency as a whole.
So Terra is better for the environment than other forms of cryptocurrency, in theory. What’s the problem?
The first issue is the lack of clarity. It took me more than a little bit of time to understand the nuances of cryptocurrency as well as the different processes that underlie the mining. The Nationals’ press release about the partnership said nothing about this crucial environmental difference and instead touted what I consider to be much less important facts about the currency’s decentralized nature and autonomous community (the community of Terra’s coin users made the decision to enter the $40m partnership). I don’t consider myself an unintelligent person, just an average Nats fan trying to figure out what on earth her team has been up to during the lockout. To people like me, in the same boat, the Nats’ announcement provides zero context to cryptocurrency, creating confusion when it comes to environmental issues. At worst, when it comes to the various other issues involved in cryptocurrency, the lack of context is predatory.
The second issue is the Nats’ announcement that Terra’s cryptocurrency, UST, could be used at stadiums starting in 2023. UST uses the proof of stake process, which is better for the environment as described above, and it seems safe to assume that UST would be the only cryptocurrency accepted at Nats Park for the life of the five-year deal. However, using any type of cryptocurrency opens the door to using other types of cryptocurrency after the deal expires, which may not use the more environmentally friendly proof of stake process. Bitcoin, for example, which uses the proof of work process, is still the largest cryptocurrency by market cap ($812 billion) and shows no signs of losing that top spot. Terra, by contrast, is the ninth largest cryptocurrency, with a market cap of $23 billion. Opening the door to one type of cryptocurrency, environmentally friendly or not, may open the door to other, more insidious types of cryptocurrency.
Somewhat relatedly, Nats Park is already cashless, and only accepts cash if first exchanged at one of three locations for “eCASH,” their digital currency. There are legitimate concerns over whether or not cashless services discriminate against those who don’t have a bank account or credit card, or against those who are underbanked (i.e. those who may have a checking or savings count but also receive financial services from those outside of the banking system). People who do not have access to banking services, either in whole or in part, are often low-income, homeless, and/or undocumented. The acceptance of crytocurrency at Nats Park, while still requiring those who use cash to swap it for “eCASH,” continues that worrying trend.
What are some ways the Nationals could bolster their credibility on environmental issues?
The Nationals, who already boast the first major professional stadium to be LEED Silver Certified by the U.S. Green Building Council, could absolutely describe the Terra sponsorship and underlying proof of stake process in ways that highlight the lessened environmental impact, thereby promoting their efforts to remain environmentally conscious. Without understanding the difference in the environmental impact of Terra versus Bitcoin, for example, an average fan might think that cryptocurrency in general is a good thing to get into, and go out and invest in a cryptocurrency that contributes intensely to climate change. By highlighting the energy efficiency of Terra and educating fans on the difference, fans can become more educated consumers as to the dangers of proof of work cryptocurrencies and steer clear of those, should they choose to invest at all. Highlighting this lesser environmental impact could also be good business sense for Terra, too—I know I tend to think better of cryptocurrencies that don’t contribute to the ever–growing threat of climate change!
The Nationals could also make an upfront promise, here and now, to only accept cryptocurrencies in Nats Park that rely on proof of stake processes. In explaining the difference and pledging to only potentially use currencies that rely on more energy efficiency processes, the Nats could immediately restore some credibility on environmental issues and show that they’re devoted to being a “leading innovator in Major League Baseball” (per the press release) while also remaining ecologically conscious.
Of course, these suggestions operate under the assumption that the Nationals have already weighed the other risks involved in promoting cryptocurrency (see: Ponzi scheme and speculative bubble) and considered them appropriate enough to enter into a multi-million dollar sponsorship deal. If the other risks did outweigh the amount of money on the table (and I’m not convinced that sponsorship revenue directly correlates to the amount owners are willing to pony up for large contracts), we would not be having this conversation.
What’s the bottom line?
If the partnership brings new Nationals fans into the fold, that’s great! I will gladly welcome any and all crypto aficionados to the Nationals fanbase, even though I personally do not think cryptocurrency is a good thing. The Nationals are the best fanbase to be a part of in major league baseball, though I am also understandably biased. That said, I’m here to talk baseball, not argue about cryptocurrency, and I hope that new fans can love the Nationals while appreciating that not everyone shares the same opinions about cryptocurrency (and that those who aren’t as enthusiastic about it don’t deserve to get bombarded with messages insulting their intelligence or person). In the interim, as more and more fans hopefully join our wonderful fold, I hope the Nationals can take steps to reaffirm their commitment to sustainability and positive environmental impact in light of this new partnership.
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