Janet Yellen, U.S. President-elect Joe Biden's nominee to be treasury secretary, speaks as Biden announces nominees and appointees to serve on his economic policy team at his transition headquarters in Wilmington, Delaware, U.S., December 1, 2020.
Leah Millis | Reuters
Treasury Secretary Janet Yellen issued a warning Monday about the dangers that bitcoin poses both to investors and the public.
Despite a sharp slide in price to start the week, the cryptocurrency continues to trade above $53,000 as it has received boosts from various sources. Elon Musk's Tesla recently made a substantial purchase and has said it will accept bitcoin for transactions.
However, Yellen said there remain important questions about legitimacy and stability.
"I don't think that bitcoin â¦ is widely used as a transaction mechanism," she told CNBC's Andrew Ross Sorkin at a New York Times DealBook conference. "To the extent it is used I fear it's often for illicit finance. It's an extremely inefficient way of conducting transactions, and the amount of energy that's consumed in processing those transactions is staggering."
Mining bitcoin requires users to solve complex mathematical equations using high-powered computer setups. The electric consumption used in the process leaves an annual carbon footprint equal to the nation of New Zealand, according to Digiconomist.
In addition to consumption concerns, bitcoin also is considered to be a tool of those involved in a number of illegal activities because its use is difficult to trace.
Then there's volatility, as the cryptocurrency's price has seen rapid peaks and valleys during its existence.
"It is a highly speculative asset and you know I think people should be aware it can be extremely volatile and I do worry about potential losses that investors can suffer," Yellen said.
Various government agencies have contemplated the idea of making an alternate digital curr...