LettersWhy cryptocurrency is a doubly dirty asset

Cryptocurrency is popular because of its resistance to governance and monitoring, making it attractive to illegal actors

It also has a massive impact on the environment. It is estimated that bitcoin consumes nearly as much electricity per year as the Netherlands

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Industrial fans cool illuminated mining rigs at the CryptoUniverse cryptocurrency mining farm in Nadvoitsy, Russia. Photo: Bloomberg

Published: 12:30am, 20 Sep 2021

I am writing in response to the article, “Cryptocurrency crime in Hong Kong hits record levels, with one victim losing HK$124 million to fraudsters” (August 2).

Adoption of cryptocurrency by Hong Kong as a new avenue of investment isn’t the right way to go.

Cryptocurrency is popular because of its resistance to governance and monitoring. The anonymity of users and the convenience of conversion of digital money into cash using cryptocurrency ATMs or online cashable gambling chips add to the traceability problem.

This has made it the favourite mode of payment for all illegal actors – be it tax fraud, terrorist financing, ransomware extortion or drug trafficking. In July, the Hong Kong police busted such a racket worth HK$1.2 billion. There are many more such examples.

According to a report by blockchain analysis firm Chainalysis, in 2019, criminals used a cryptocurrency to launder US$2.8 billion. The United Nations notes that money laundering annually amounts to an estimated US$800 billion to US$2 trillion.

Cryptocurrency also has a massive impact on the environment. Cheap sources of power are needed to keep powerful machines operating at full capacity to crack complex algorithmic puzzles and submit random numbers to gain rewards in the form of digital coins.