Environmental, social and governance (ESG) guidelines for investing could bring cryptocurrencies to zero.
Crypto mining underpins the existence of the crypto. Crypto mining is the computing process in the creation of a cryptocurrency and in the verification of a cryptocurrency transaction. It is an energy-intensive computing process.
To save costs from its massive energy consumption, crypto miners are using cheap fossil-fuel power plants like coal plants to power crypto mining. This could discourage financial institutions from investing in cryptos.
Crypto mining competes against critical industries and ordinary consumers for electricity. The massive demand for electricity from crypto mining can stoke energy inflation. High energy inflation could force governments to clamp down on crypto mining to control energy inflation and pacify consumers. The potential to cause energy inflation could be the most profound adverse social impact of cryptocurrencies.
The final blow against cryptocurrencies will be market regulations in key markets. Cryptocurrencies thrive in an anonymous and non-transparent environment. Anonymity and the absence of a central regulatory body are the key features of cryptocurrencies. There is no governance in crypto currencies.
Regulators in key markets will imposed regulations to put transparency in crypto currencies. Regulations could destroy the anonymity features of these crypto currencies to protect ordinary consumers from possible pump-and-dump investment schemes. Market regulators will not allow crypto currencies to proliferate without governance.
Regulations against cryptocurrencies are taking shape. China has announced that all crypto-related transactions will be considered illegal. It said that 10 regulatory agencies, including the central bank, would work together to track down crypto-related activity. The ban even says that overseas exchanges are barred from providing services to mainland investors.
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