The world of cryptocurrency has long been fascinated by the potential for financial gains through trading Bitcoin and other digital assets. However, a recent tweet from well-known investor and co-founder of Guggenheim Partners, Scott Minerd, has shed light on an often-overlooked aspect of this industry: the non-profitability of cryptocurrency technology itself.

According to Minerd, when you trade Bitcoin (or any other cryptocurrency), you are essentially trading “non-profitable tech.” This statement may come as a surprise to many, as the allure of quick profits and potential for huge returns has driven much of the growth in the cryptocurrency market. However, it is important to understand the underlying economics of this industry before investing.

To illustrate his point, Minerd shared an image on Twitter of the energy consumption required to mine a single Bitcoin. The graphic shows that the energy consumption for one Bitcoin transaction is equivalent to the amount of energy used by an average American home over a period of several months. This highlights the significant environmental impact of cryptocurrency mining, which can be seen as a major drawback when compared to traditional fiat currencies.

But the non-profitability of cryptocurrency technology goes beyond just energy consumption. The very nature of blockchain technology, which underlies all cryptocurrencies, is designed to be decentralized and secure, but it also comes with significant computational costs. Minerd notes that the cost of securing a single Bitcoin transaction is equivalent to the cost of 100,000 Visa transactions. This highlights the vastly different economics at play in the cryptocurrency space compared to traditional payment systems.

So why do investors continue to flock to cryptocurrencies despite these challenges? The answer lies in the potential for huge returns on investment. Cryptocurrencies have proven to be highly volatile, with prices fluctuating rapidly and offering opportunities for significant gains. However, it is important to approach this market with caution and a clear understanding of the underlying economics.