Is Cryptocurrency Unethical?

March 11, 2024

What do Bitcoin, Ethereum, Tether, and Dogecoin have in common? They’re all cryptocurrencies—digital currencies in which transactions are verified by a decentralized computer system using cryptography, rather than by a centralized authority like a government or a bank.

In the past few years, crypto has exploded in popularity. In 2021, Elon Musk announced that Tesla would accept Bitcoin for the purchase of its luxury electric cars. In the U.S., more than 2,300 businesses were accepting Bitcoin as of
late 2022. That includes companies such as Microsoft, PayPal, and AT&T.

As crypto becomes more widely accepted, questions have been growing about the ethics of its use—including how it’s “mined,” or created. That process requires many powerful, energy-intensive computers in many different places to constantly churn through data. A business school ethics professor and a U.S. senator face off about whether digital currencies are unethical.

In the past decade, the global popularity of cryptocurrencies has soared. But this growing enthusiasm has highlighted the significant ethical problems with crypto.

One of the defining features of cryptocurrency is that it allows financial transactions to remain anonymous. But this makes crypto a natural tool for all kinds of illegal activities—money laundering, evading economic sanctions that prohibit funds from going to certain countries, such as Russia, and even financing militant groups or terrorist activities. It’s wrong to allow these kinds of activities to flourish.

Most cryptocurrencies are highly volatile, with their values swinging wildly due to speculation. Because there’s no central authority overseeing crypto, there’s very little trust in its reliability. The speculative nature of the crypto market has fostered addiction problems, especially among young people. And the lack of regulation also means crypto investors have no recourse or protection.

Cryptocurrency is a natural tool for all kinds of illegal activities.

Finally, there’s the huge problem of crypto’s environmental impact. The blockchain technology that’s at the heart of crypto requires huge amounts of energy. A single Bitcoin mining operation in Texas uses about as much electricity as 300,000 nearby houses, according to a recent New York Times investigation. By some measures, the amount of energy used in a year to create Bitcoin is more than the total used annually by Finland, a European nation of 5.5 million people. In a world where climate change is a pressing concern, this is deeply unethical.

To address these serious ethical concerns, we need government regulations, both on a national and international level. In thinking about how to rein in cryptocurrencies, we must take into account the real purpose of money: to serve as an instrument so that people can acquire, via trade, the goods and services necessary for their development, respecting their dignity and contributing to the common good of society. Currently, cryptocurrencies are not playing that role.

—JOAN FONTRODONA

Head of Business Ethics Dept., IESE Business School, Barcelona, Spain

While some Washington lawmakers are deeply suspicious of the digital assets commonly known as cryptocurrency, I believe we should embrace and develop the enormous potential of this technology.

Digital assets can make financial transactions faster, cheaper, and safer. If the U.S. is going to successfully compete with China in the future, we must remain open to the innovation that cryptocurrency offers.

Can something that is simply computer code be unethical? No. Can it be used for unethical purposes? Surely. The U.S. dollar is used in more criminal transactions than any other financial asset, but no one is calling the dollar inherently unethical or contemplating banning its use. Without a doubt, some unethical individuals use cryptocurrency to scam others, but they are a small minority. Some 34 million Americans use crypto as a long-term investment or to quickly complete payments, but very few are using them to cause harm to others.

Cryptocurrency can make financial transactions faster, cheaper, and safer.

The internet faced similar challenges to digital assets when it was first introduced. The internet connected the world for the first time in the 1990s but was heavily used by criminals. We didn’t ban the internet—we created rules of the road that pushed the criminals out and allowed the internet to flourish because we recognized the potential it had to change the world. That’s how we need to approach cryptocurrency now.

An important part of any financial tool is guardrails to protect consumers from bad actors. I am working with my friend Senator Kirsten Gillibrand to pass the Responsible Financial Innovation Act to put those guardrails around digital assets and to ensure that the United States stays on the cutting edge of financial technology. We are only scratching the surface of the capabilities of digital assets, and they are an important part of the U.S. remaining the global financial leader.

—SENATOR CYNTHIA LUMMIS

Republican of Wyoming