The debate about the energy required to mine Bitcoin (Bitcoin) Has been going on. Although technology pioneers such as Elon Musk recently mentioned, The crypto industry is heading for a greener future, Some academic researchers pointed out that mining BTC Consumes more electricity than a small country.
Although these arguments are still being hotly debated, it is clear that people’s awareness of the green encryption program has been on the rise.For example, some Bitcoin miners are now working on nuclear power As a solution to eliminate carbon emissions from electricity used to mine BTC. At the same time, crypto companies have begun to offset their carbon emissions to ensure the sustainability of the industry.
It is necessary to adopt offsetting carbon emissions
Francisco Benedito, CEO of the financial technology company ClimateTrade, told Cointelegraph that the crypto industry is going through a “green hype cycle”, which is driving the industry’s sustainable development. Although Benedito believes this is being demonstrated in many different ways, he explained that offsetting carbon emissions has now become one of the most important initiatives.
This is especially true as cryptocurrency companies continue to face more and more problems pressure Investors, lenders and regulators will achieve decarbonization in the next few years. KPMG U.S. Climate Data and Technology Manager Venki Kumar told Cointelegraph that crypto organizations are now expected to estimate the carbon footprint of the digital assets they hold: “Like any other digital technology, encryption also has a carbon footprint. Energy mix.”
However, estimating a company’s carbon footprint is only half the battle. To ensure sustainability and adoption, many organizations are offsetting their carbon emissions to offset the carbon energy generated by their use. For example, SkyBridge Capital, a global investment company, recently partnered with carbon credit provider MOSS Earth. Purchase and immediately phase out tokens representing approximately 38,436 tons of carbonDaniel Barile, SkyBridge’s partner and portfolio manager, told Cointelegraph that the company believes this action is beneficial to Bitcoin adoption:
“We acknowledge that the carbon emissions associated with Bitcoin mining are a concern for many current and future potential Bitcoin investors, and believe that’greening’ existing Bitcoin assets will eventually expand their potential investor base. In the long run, We expect Bitcoin mining will be fully renewable by the end of this decade.”
Barile further pointed out that the company’s recent transactions offset the estimated historical carbon footprint of Bitcoin currently held in its products, including in its multi-strategy fund and First Trust SkyBridge Bitcoin Fund.
SkyBridge’s initiative to offset its greenhouse gas emissions was proposed shortly after the major cryptocurrency exchange Gemini announces cooperation with Climate Vault, A non-profit organization dedicated to helping companies achieve carbon neutrality.it’s been famous Through this cooperation, Gemini will purchase nearly 350,000 metric tons of carbon licenses as the first step to offset its use of the Bitcoin network.In addition to SkyBridge and Gemini, Canadian Bitcoin Exchange Traded Fund (ETF) issuer Ninepoint Partners LP also revealed plans Offset the carbon footprint of its BTC ETF product.
Will carbon offsets stimulate adoption?
Although offsetting carbon emissions seems to be a trend for crypto companies that want to go green and promote adoption, the question of correctly estimating Bitcoin’s carbon footprint remains.
According to Barile, SkyBridge’s ultimate goal is to offset the estimated historical carbon footprint of Bitcoin currently held in all of its products. However, Barile mentioned that it is impossible to do this precisely: “The process of estimating the historical carbon footprint of Bitcoin is subject to many assumptions and limitations.”
To put this in perspective, Andreas Homer, CEO of Aerial (a sustainable development platform that uses tools to track encrypted carbon emissions), told Cointelegraph that Aerial calculates encrypted carbon emissions by looking at the wallet address to understand what is happening on the relevant blockchain. Which transactions have been made. With certain accounts. Then link these transactions to the estimated emissions of each transaction:
“One BTC is equivalent to approximately 1 ton of emissions, or one carbon credit. For Ethereum transactions, we will consider gas fees. In the case of Bitcoin, we estimate based on transaction volume.”
Even with tools designed to calculate encrypted carbon emissions, the accuracy depends entirely on the data. In this regard, Kumar pointed out that users of such tools should be aware that the accuracy of the carbon emissions estimated by these solutions may depend on the input data. In addition, such solutions depend on core assumptions that support the methodology followed in the development of these tools.
Although Kumar makes an important point, it may be easier to determine the carbon footprint of Bitcoin compared to other cryptocurrencies or computer data centers. Bill Tapscott, CEO of CarbonX, a greenhouse gas reduction software project company, told Cointelegraph that accuracy is relative and there is no comparison:
“Compared with computer centers, Bitcoin has the advantage of having a publicly observable hash rate for analysis; highly specialized hardware with specific emission factors after use and disposal; and formulating a clear incentive structure for miners- That is, the direct link between mining and rewards, thereby maximizing efficiency-and in the data center, idle servers will be in a spinning state.”
Tapscott stated that the accuracy of Bitcoin’s carbon footprint is better understood because it has been studied compared to other digital assets and proof-of-work or proof-of-stake blockchains. It’s worth noting that Kumar added that another challenge facing the crypto industry is the evolution of the voluntary carbon credit market: “It takes a long time to realize environmental value from investments in preventing forest degradation, reforestation and other initiatives.”
Nonetheless, Kumar shared that KPMG hopes that the company will continue to reduce the use of carbon credits to offset its encrypted emissions and eventually transition to renewable energy sources, such as Solar energyTo ensure green encryption. However, Kumar pointed out that more than ever, regulatory measures are needed to encourage companies to accelerate the transition to green resources: “This may catalyze increased carbon offsets.”