Agustin Carstens, general manager of the Bank for International Settlements (BIS), has renewed his criticism of bitcoin, arguing that the cryptocurrency is inherently risky and could become increasingly vulnerable to a 51% attack as it moves closer to its fixed maximum supply of 21 million coins. Speaking at the Hoover Institute on January 27, 2021, Carstens said investors should recognize that bitcoin could ultimately fail altogether, adding that scarcity and cryptography on their own are not enough to guarantee a sound monetary system.
Carstens Questions Bitcoin’s Long-Term Resilience
A long-time bitcoin skeptic, Carstens focused on the structure of the Bitcoin network itself. He argued that as fewer new coins are issued over time, miners will receive lower rewards for validating transactions. In his view, that shift could weaken incentives for miners, increase confirmation wait times, and make the network more exposed to majority attacks. His remarks centered on the idea that a declining issuance schedule may have implications not only for miner economics, but also for the security assumptions that support the network.
Carstens framed this as a structural concern rather than a short-term market problem. As bitcoin approaches its hard cap, he suggested, the system could face mounting pressure because the rewards currently used to compensate miners would continue to shrink. That dynamic, according to his comments, could create conditions in which the network becomes more vulnerable than supporters typically acknowledge.
Labels Bitcoin a Speculative Asset
Beyond network security, Carstens described bitcoin as a speculative asset that lacks what he called real value backing. He argued that its volatility makes it unsuitable as a unit of account, because businesses and consumers cannot realistically price goods and services in a currency whose value fluctuates sharply. In his assessment, those same price swings also undermine bitcoin’s usefulness as a medium of exchange and weaken its credibility as a store of value.
His comments reflect a broader central banking critique of bitcoin: that while the asset may be scarce by design, scarcity alone does not make it money in the practical economic sense. Carstens suggested that a reliable monetary instrument must provide stability and confidence well beyond what he believes bitcoin currently offers.
Energy Use and Market Conduct Also Criticized
Carstens also pointed to bitcoin mining’s electricity consumption, saying it uses “more electricity than all of Switzerland.” He paired that criticism with allegations of price manipulation, presenting both issues as further evidence that bitcoin’s foundation is weaker than many advocates claim. In his telling, high energy costs and questionable market behavior add to the risks facing participants in the ecosystem.
These concerns were presented as part of a larger case against treating bitcoin as the basis for a modern monetary framework. Rather than seeing it as a credible alternative to sovereign money, Carstens portrayed it as a fragile and speculative system whose shortcomings become more visible under scrutiny.
Private Stablecoins Face Similar Skepticism
Carstens did not limit his remarks to bitcoin. He also criticized private stablecoins, including the project once known as Libra and later renamed Diem. His objection was not merely technical; it was institutional. He argued that private entities should not run what is effectively a public monetary system by issuing digital coins backed by other assets such as fiat currencies.
According to Carstens, private stablecoins cannot serve as the foundation of a sound monetary system and should be subject to heavy regulation and supervision. His position underscores the BIS view that monetary authority should remain under public oversight, especially when digital assets begin to resemble instruments used widely for payments and savings.
Central Banks Should Lead Digital Money
At the center of Carstens’ speech was a clear policy message: if digital money is to play an enduring role in the future, central banks must remain pivotal. He argued that only central banks can guarantee stable value, manage the elasticity of aggregate money supply, and oversee the security of the overall system. In other words, the issue is not simply whether digital money will exist, but who should control its issuance and governance.
That stance is consistent with the broader BIS approach to digital finance. The institution has repeatedly emphasized that innovation in payments and digital currency design may be valuable, but final responsibility for trust, stability, and monetary credibility should remain with central banks rather than decentralized networks or private corporate issuers.
A Debate That Extends Beyond Bitcoin
Carstens’ remarks highlight a deeper divide between the crypto sector and traditional monetary authorities. Supporters of bitcoin often see decentralization, fixed supply, and censorship resistance as core strengths. Critics such as Carstens, by contrast, see volatility, security assumptions, and governance outside the state as fundamental weaknesses. His speech therefore was not only a criticism of one asset, but a defense of the conventional view that money is ultimately a public good best managed by central institutions.
Whether or not market participants agree with his conclusions, the speech makes clear that the debate over bitcoin’s role in the financial system remains closely tied to bigger questions about sovereignty, trust, monetary control, and the architecture of digital finance. For Carstens, the answer is straightforward: digital money may evolve, but central banks should remain firmly in charge.