Crypto Is Bad in All Sorts of Ways

crypto-is-bad Environmental destruction, greater fool economics, regulatory arbitrage, and ransomware's favorite payment method. The SEC was right all along. cryptocurrency, Bitcoin, environmental impact, blockchain criticism, crypto scams, SEC regulation, ransomware

Bitcoin consumes more electricity annually than Argentina - around 138-178 TWh per year according to Cambridge University researchers. We're literally burning the planet so people can speculate on digital tokens. I've watched a lot of technologies come and go. Crypto is different. It's not just overhyped - it's actively harmful.

The problem is that after 15+ years, cryptocurrency has found exactly one use case where it outperforms traditional finance: doing things that regulated financial systems won't let you do. Buying drugs. Paying ransomware. Evading taxes. Circumventing sanctions. I'm talking about cryptocurrency as it actually exists in the real world. The gap between the promise and the reality isn't just marketing. It's a fundamental mismatch.

The Environmental Destruction

Let's start with the numbers that crypto advocates don't like to discuss.

Bitcoin alone consumes more electricity annually than many countries. According to the Cambridge Bitcoin Electricity Consumption Index, estimates put it around 138-178 TWh per year - comparable to Argentina or the Netherlands. This isn't theoretical; this is measured power consumption tracked by researchers at Cambridge University.

That energy has to come from somewhere. A significant portion comes from fossil fuels. A 2025 study in Nature Scientific Reports found that Bitcoin's energy consumption has a measurably negative impact on environmental sustainability across major mining countries. The shift toward renewable energy hasn't been sufficient to offset the damage.

"But Bitcoin uses renewable energy!" Sometimes. But that renewable energy could power homes, hospitals, and factories instead. The opportunity cost is real even when the electrons are green. According to IMF research, crypto mining and data centers now account for 2 percent of global electricity use and nearly 1 percent of global emissions. The footprint is growing.

"Proof of stake fixes this!" Ethereum moved to proof of stake and reduced its energy consumption significantly. That's good. But Bitcoin is proof of work and shows no signs of changing. And Bitcoin dominates the market.

We're literally burning the planet so people can speculate on digital tokens. That's not neutral. That's destructive.

The Greater Fool Economics

Here's the thing about Bitcoin and most cryptocurrencies: they don't produce anything.

A stock represents ownership in a company that (theoretically) produces goods, services, and profits. A bond is a loan that (theoretically) gets paid back with interest. Real estate is a physical asset that provides shelter or rental income.

Bitcoin produces nothing. It doesn't generate revenue. It doesn't create goods. It doesn't pay dividends. The only way to profit from Bitcoin is to sell it to someone else for more than you paid.

That's the greater fool theory: I buy at $40,000 hoping to sell at $60,000 to someone who hopes to sell at $80,000. The last buyer - the greatest fool - holds the bag when music stops. The NFT crash was the most visible example of this dynamic playing out.

"But it's a store of value!" A store of value that can drop 70% in a year isn't storing value. Gold has thousands of years of history as a store of value. Bitcoin has 15 years of wild volatility. These are not the same thing.

"But it's digital gold!" Gold has industrial uses. Gold has cultural significance across civilizations. Gold doesn't require constant electricity consumption to exist. The comparison is marketing, not analysis.

The Regulatory Arbitrage

Here's a question: what can you do with cryptocurrency that you can't do with regular money?

The honest answers are:

• Buy drugs
• Pay ransomware
• Evade taxes
• Circumvent sanctions
• Launder money

I'm not saying everyone who uses crypto does these things. But these are the use cases where crypto has an actual advantage over traditional finance. Everything else - buying coffee, paying employees, transferring money - is more expensive, slower, and less reliable with crypto than with existing systems.

"But the unbanked!" The unbanked need reliable, stable currency and access to financial services. They don't need an asset that drops 50% and requires internet access and technical sophistication to use safely.

"But inflation!" If you live in a country with hyperinflation, you want dollars or euros - stable currencies with established track records. You don't want Bitcoin, which is more volatile than the currencies you're fleeing. The NFT crash was predictable for the same reasons - speculative assets aren't stores of value.

The primary use case for cryptocurrency is doing things that regulated financial systems won't let you do. That's not a feature - that's a warning.

Ransomware's Favorite Currency

Speaking of things you can do with crypto: ransomware has exploded since cryptocurrency made payment easy.

Before Bitcoin, ransomware attackers had a problem: how do you get paid? Wire transfers are traceable. Cash is physical. Every payment method had friction that limited the business model.

Crypto solved that. Now attackers can encrypt your hospital's systems, demand payment in Bitcoin, receive it pseudonymously, and cash out through mixers and exchanges. The ransomware industry has grown from a nuisance to a national security threat.

Billions of dollars extorted from hospitals, schools, cities, and businesses. Pipeline shutdowns. Emergency rooms going dark. All made possible by cryptocurrency's unique properties.

The crypto advocates' response? "That's not crypto's fault, that's the criminals' fault." But every technology is evaluated by its actual effects, not its theoretical purity. Crypto made ransomware economically viable at scale. That's a fact.

The Decentralization Myth

"Decentralization" is the core promise of cryptocurrency. No central authority. No single point of failure. Power to the people.

Here's the reality: Bitcoin mining is dominated by a handful of mining pools. At various points, 3-5 pools have controlled over 50% of mining power. That's not decentralization - that's an oligopoly.

Exchange volume is concentrated in a few platforms. Coinbase, Binance, and a few others dominate. When Binance has a problem, the whole market feels it. That's not decentralization - that's a different set of central points of failure.

Wealth distribution is extremely concentrated. A small number of wallets hold a disproportionate share of Bitcoin. The "whales" can move markets with their trades. That's not democratization - that's plutocracy with extra steps.

The vision of decentralization has not materialized. What we have instead is a poorly regulated parallel financial system with its own power concentrations and fewer consumer protections.

The SEC Was Right

The crypto industry has spent years fighting the SEC, claiming that cryptocurrency isn't a security and shouldn't be regulated as one.

Here's the thing: most cryptocurrency offerings look exactly like securities offerings. Someone creates a token, sells it to raise money, promises future value based on their efforts. That's the definition of a security under U.S. law.

The SEC exists to protect retail investors from fraud. The rules exist because, historically, people got scammed by unregistered securities offerings. The same scams are happening in crypto - rug pulls, pump-and-dumps, misleading promises - but without the regulatory protection.

When the SEC goes after crypto projects, the industry screams about innovation and overreach. But the cases are often straightforward fraud: founders who dumped tokens, projects that lied about their technology, exchanges that misused customer funds.

The regulation isn't the problem. The fraud is the problem. The regulation is the response.

What Blockchain Actually Does Well

I want to be fair. Is there anything blockchain technology does well?

Maybe. Timestamping and provenance for digital assets has some legitimate use cases. Supply chain tracking might benefit from immutable records. Some forms of distributed consensus could be useful. But as I discovered evaluating blockchain startups in 2018, these use cases rarely survive contact with reality.

But here's the thing: for almost every proposed blockchain use case, there's a simpler solution that works better. A database with good auditing. A trusted third party. A well-designed API.

"But you have to trust someone!" Yes. And in practice, trusting well-regulated institutions with legal accountability has better outcomes than trusting anonymous miners with economic incentives that don't align with yours.

The number of legitimate problems that require blockchain's specific properties - and can't be solved better by existing technology - is vanishingly small.

When Crypto Actually Helps

I'm not saying cryptocurrency is always wrong. There are specific situations where it genuinely outperforms alternatives:

• Hyperinflationary economies. If your country's currency loses 50% per month like Venezuela or Zimbabwe at their worst, Bitcoin's volatility looks stable by comparison. When the banking system has collapsed, any store of value beats none.
• Cross-border remittances to the underbanked. Sending money to family in countries without functional banking infrastructure can cost 10-15% through traditional channels. Crypto can undercut that, especially where mobile money hasn't reached.
• Sanctioned populations, not sanctioned regimes. Ordinary people in countries like Iran or North Korea didn't choose their governments. Crypto sometimes provides their only access to global commerce.

But these edge cases don't justify the environmental cost, the scams, or the speculation. For the 95% of crypto users in functioning economies with stable currencies and working banks, the use case remains: speculation or regulatory arbitrage.

Crypto Red Flag Scorecard

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Crypto Exposure Red Flag Scorecard

"We're literally burning the planet so people can speculate on digital tokens."