The downfall of cryptocurrency is nigh. It's about time

Please chip in to support more articles like this. Support for as little as $5 per month!

Cryptocurrency mining equipment. Image credit: Лечение Наркомании/Pixabay

Binance runs one of the largest cryptocurrency trading operations in the world, helping customers speculate on the wild price gyrations of bitcoin and other crypto assets. But in June it closed its Ontario operations, following a crackdown by provincial regulators on cryptocurrency trading. The company also faces regulatory challenges in the U.K. and Japan.

Other cryptotraders (including Bybit Fintech) have been accused by the Ontario Securities Commission (OSC) of unregistered trading and failing to disclose required information. It's a sign Canadian securities regulators are trying to impose some law and order in the Wild West world of cryptocurrency. Central banks (including the Bank of Canada) are also monitoring risks to financial stability from this frenetic digital casino.

Instead of waiting for the sheriff to knock on its door, Binance left town. Other crypto platforms will likely follow. Some financiers complain this "red tape" will lock Canada out of a new growth industry. But I say good riddance to them all.

The crypto craze carries the same financial and moral risks as every previous speculative bubble: from Dutch tulips to gold manias to the 1990s dot-com craze. Each bubble is inflated by cheap credit and the age-old dream to buy low and sell high (the other way 'round for short traders). But speculation involves no useful production or value-added at all. And when gamblers play with borrowed money (leveraged at ratios of up to 100 to 1), we all pay the price when the bubble inevitably pops. That moment may be nigh: bitcoin has already lost almost half its value since April.

But even compared to past speculative bubbles, cryptocurrencies are uniquely wasteful and destructive. Unlike gold (which can make jewelry), fine art (which is pleasant to look at), real estate (which you can inhabit), or even tulips (which add to any garden), cryptocurrencies have no inherent or productive value whatsoever.

Libertarian crypto-boosters claim they are an alternative form of money, free from government control. That is nonsense. To serve as money, an asset must have three key attributes: a unit of account, a store of value and acceptance as payment in exchange.

Wild and continual swings in the value of bitcoin and other crypto assets prevent them from serving any of those functions. And the absence of government sanction means its appeal depends solely and precariously on mass psychology: the willingness of others to take it seriously. That won't last long. Canadian Tire bucks are closer to true money than cryptocurrencies. And the only people who genuinely use cryptocurrencies to finance exchanges are gangsters and tax evaders.

The most repugnant aspect of cryptocurrencies is the enormous amount of energy needed to power the millions of computers engaged 24/7 in "mining" (digitally creating) new currency. Bitcoin mining alone uses up more electricity each year than a medium-sized country (like Norway or Argentina). Even trading a single bitcoin needs enormous electricity to power the massive calculations needed to keep the transaction untraceable.

Economist Alex de Vries estimates bitcoin mining adds 90 megatonnes per year to global greenhouse gas emissions. Including other cryptocurrencies, and the energy used for transactions, this ultimately pointless activity adds twice as much to carbon pollution as Canada's entire mining and petroleum industry. Where is Jane Fonda when you need her?

An alien watching from outer space would scratch their heads over why supposedly intelligent life would waste so much brainpower and electricity on such an utterly useless activity.

Yes, securities regulators should throw the book at the cryptotraders. But merely requiring them to file lengthy prospectuses and inform customers about risk isn't enough. We should go further, and actively discourage this wasteful industry. Cryptocurrency assets should be excluded from tax-sheltered vehicles like RRSPs. And the other tax subsidies fuelling this speculation should also be withdrawn: like writing off interest costs and other investment expenses, and the 50 per cent exemption of trading profits from income tax.

After all, if you work all day flipping burgers for minimum wage at McDonald's, you must count every penny of your hard-earned wages on your tax return. We should expect the same from those who flip bitcoin. Cryptocurrencies are surely the best reason ever to re-orient our economic and tax policies to reward real work, rather than pointless, polluting speculation.

Jim Stanford is economist and director of the Centre for Future Work, and divides his time between Vancouver and Sydney. He tweets at @JimboStanford.

This column was first published in the Toronto Star.

Image credit: Лечение Наркомании/Pixabay

Related Items

Thank you for reading this story…

More people are reading than ever and unlike many news organizations, we have never put up a paywall – at rabble we’ve always believed in making our reporting and analysis free to all, while striving to make it sustainable as well. Media isn’t free to produce. rabble’s total budget is likely less than what big corporate media spend on photocopying (we kid you not!) and we do not have any major foundation, sponsor or angel investor. Our main supporters are people and organizations -- like you. This is why we need your help. You are what keep us sustainable. has staked its existence on you. We live or die on community support -- your support! We get hundreds of thousands of visitors and we believe in them. We believe in you. We believe people will put in what they can for the greater good. We call that sustainable.

So what is the easy answer for us? Depend on a community of visitors who care passionately about media that amplifies the voices of people struggling for change and justice. It really is that simple. When the people who visit rabble care enough to contribute a bit then it works for everyone.

And so we’re asking you if you could make a donation, right now, to help us carry forward on our mission. Make a donation today.


We welcome your comments! embraces a pro-human rights, pro-feminist, anti-racist, queer-positive, anti-imperialist and pro-labour stance, and encourages discussions which develop progressive thought. Our full comment policy can be found here. Learn more about Disqus on and your privacy here. Please keep in mind:


  • Tell the truth and avoid rumours.
  • Add context and background.
  • Report typos and logical fallacies.
  • Be respectful.
  • Respect copyright - link to articles.
  • Stay focused. Bring in-depth commentary to our discussion forum, babble.


  • Use oppressive/offensive language.
  • Libel or defame.
  • Bully or troll.
  • Post spam.
  • Engage trolls. Flag suspect activity instead.