At the end of April, the news reached Dutch broadcaster NOS: for the first time in the Netherlands, a house was paid entirely with bitcoins. The price for the penthouse in Veghel was 21 bitcoins. At the time, that equates to around 1 million euros. The estate agent involved spoke of an exciting transaction. “It is still a bit of a search for the right moment because the price of bitcoins on trading platforms can fluctuate enormously”, he said.

These fluctuations happened, for example, early May, just before Ascension Day. The price plunged more than 10 per cent when Tesla chief executive Elon Musk said that he would no longer accept bitcoin as a means of payment. The reason? In his opinion, mining bitcoin consumes too much fossil energy.

Bitcoin is not a physical (tangible) currency but a kind of calculation formula. It works based on blockchain technology, a collective log where all participants keep track of all transactions. Every 10 minutes, a new “page” is added to the record, listing the latest changes. To process each update securely, a complex mathematical formula must be solved. Special computer systems around the world are puzzling these formulas all day long. This puzzling is called mining.

Since its inception in 2009, bitcoin has risen sharply in value, despite fluctuations. In addition to bitcoin, more and more digital coins appear on the market that use the same technology. They are called altcoins. In the beginning, they cost almost nothing, but as more investors come on board, they increase in value.

Reformed

Christians are also saving and investing in altcoins. The idea is to buy the coins when the value drops and sell them again when it rises. That strategy can yield a nice profit.

Entrepreneur Gert-Wim Dubbeldam (46) from Lisse saw many young reformers trading in altcoins. That got him interested as well. He now trades in them himself. “Yet I doubt whether I am doing the right thing. The returns have been extremely high over the years. Sometimes I ask myself: What does it do to my greed? And what does God want me to do with my money? It strikes me that such questions do not play a role at all among Reformed young people.”

Johan Graafland (61) is a professor at Tilburg University. His field of study includes economic ethics. Because of the low interest rate on savings, he started to invest more. But he does not invest in cryptocurrencies.

“From a Christian perspective, we should think more about the extent to which an investment contributes positively to society. The theologian Johan Calvin thinks it is important, when choosing a career, to consider how you can be of service to society. That principle applies not only to labour but also to capital.”

According to Graafland, there are better choices than bitcoin. “I think of investing in sustainability funds or in microcredit. You then lend a small amount of money to starting entrepreneurs in developing countries, allowing them to invest in a shop inventory, for example.”

He is critical of the energy consumption of bitcoins. “If you only look at the return while the effect on the climate is severe, I wonder if you know what you’re doing. You are gaining something at the expense of society.”

Currently, cryptocurrencies consume about 138.85 terawatt-hours of electricity per year. This is because computers must make heavy calculations during transactions. By comparison, the annual Dutch electricity consumption is 108.8 terawatt-hours, 30 per cent of which is green.

Surplus energy

Journalist Arnold Hubach (23) from IJsselmuiden, collects bitcoin. He says that, in practice, the digital currency mainly uses surplus energy. “Think of the hydropower plants in China. In the rainy season, there is a lot of green energy left over that is not needed in the cities. Bitcoin benefits from that. In addition, bitcoin is a big party and therefore also a driver of the generation of new renewable energy.”

Research shows that 80 per cent of the energy used by Bitcoin is generated in China. Of that, 60 per cent is green. The remaining energy is generated using coal. Data analyst Johan van den Brink (38) from Veenendaal consciously does not invest in crypto coins. “Part of the required energy might be generated in a green way, but not all of it. Moreover, the number of transactions will increase in the coming years, which means that the power consumption will also grow.”

The crypto world is still developing. Several countries are investigating the possibility of launching their own digital currency. In such a case, the government would have much more influence on digital money than it does now. In combination with digital traces that citizens leave behind online and that are stored, this is a nightmare for inhabitants of a totalitarian state. But there are also positive aspects. For example, international payments are faster with cryptocurrencies.

This article was published earlier in Dutch daily Reformatorisch Dagblad, on May 17th.