Rarely have the worlds of energy, climate change and high finance come together so dramatically as with the collapse of the cryptocurrency exchange FTX in early November. For years environmentalists have been pointing out the huge quantities of electricity demanded by virtual currencies. Back in January 2022, it was alleged that the second largest currency Ethereum was using more power than Sweden in winter.

The sheer volume of power used for Bitcoin mining has been known for years. The fatuous use of power in hundreds of thousands of computers to find a 64-digit hexadecimal number, using 16 rather than 10 as the base, to get free Bitcoin, can only be described as a truly idiotic use of electricity in an era of climate change. Needless to say, very little of this power, whether in Texas or Kazakstan, is green.

Now with the collapse of FTX, largely through the free use of its user-owned content by the virtual currency investor, Sam Bankman-Fried’s co-owned Alameda, via the invention of its own cyber tokens FFT, the US and other authorities are finally waking up to the scale of the problem. Given that the US Securities and Exchange Commission were crowing over the fact that they had managed to fine Kim Kardashian $1 million for failing to mention that she had received $250,000 for plugging Ethereum which was a bit naughty, the FTX scandal is bring home something much bigger.

In fact the US Government has suddenly realized that virtual currencies are a threat to the almighty Greenback. This is not before time, since the Chinese recognized this some years ago and banned them both on energy grounds and in protection of the Renminbi. Where this goes from now on will be very interesting, not least for the numerous celebrities who got financial rewards for promoting cyber money, and for the Democrats who received $55 million from FTX and the Republicans who got $28 million before the mid-term elections.

Maybe way back when, we should have learned a lesson from that genius at fraud, Ruja Ignatova, who made $5 billion out of OneCoin back in 2014 and then disappeared in the largest ever known ponzi scheme. Equally, we may learn a little more about the reportedly unhackability of blockchains. After all, Alameda apparently lost $600 million from a hack on the day their catastrophe happened.

Either way, it has to be said that it is not entirely sensible for the global economy that people can simply create their own money in cyberspace. For what John Ray said about FTT can be said about most cyber currencies: “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.” Coming from the man who cleared up the Enron mess, that is saying something.

I will be writing more about this and the cyber currency networks later, alongside other aspects of the internet’s use of electricity.