The Big Business Alliance aims to reduce Crypto’s carbon footprint

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A group of more than 20 companies consisting of crypto, finance, technology, energy and non-governmental organizations have come together to focus on the environmental impact of cryptocurrency.

In an announcement today, the Crypto Climate Accord – reportedly inspired by the 195 signatory Paris Agreement on Climate Change – stated that it aims to address “the large and growing energy use of cryptocurrency and blockchain and the climate impact of their energy use.” The group’s partners, created by the nonprofit Energy Web Foundation, the Rocky Mountain Institute, and the Alliance for Innovative Regulation, include high profile crypto companies like blockchain-based payments company Ripple, Canadian mining company Hut 8, and investment firm CoinShares for digital assets, Ethereum software company Consensys, and others.

“Industries from around the world economy are starting to decarbonise their businesses,” the group said. “We can do the same in crypto. We have the opportunity to decarbonize the industry.”

The long-term goals of the Crypto Climate Accord include converting all blockchains in the world to 100% renewable energy through the United Nations Framework Convention on Climate Change in 2025 and developing an open source accounting standard for measuring emissions from the cryptocurrency industry. The group also aims for the entire crypto industry to become net carbon zero by 2040 – this term refers to a time when man-made carbon emissions can be effectively removed from the atmosphere.

Many fintech and crypto firms have publicly committed to greener initiatives as the environmental impact of digital assets becomes more apparent. Last year, Ripple announced that it would commit to becoming net-zero by 2030 by partnering with the Energy Web Foundation and investing in carbon removal technologies.

“The Crypto Climate Accord recognizes that financial technologies – including blockchain and cryptocurrency – are well positioned to lead Global Finance’s commitment to a sustainable future,” said Ripple in response to today’s launch. “Recent studies suggest that 2023 will be the most critical years of adoption growth for crypto and we know that the longer we wait the harder it will be to reverse engineer a systemic trait like sustainability.”

Both Bitcoin (BTC) and blockchain have received praise for their role in transforming global finance, but also for criticizing the technology’s impact on climate change. According to the Digiconomist’s Bitcoin Energy Consumption Index, the energy required to maintain the Bitcoin network is estimated at around 95.4 TWh per year – an amount that is comparable to electricity consumption in Kazakhstan. Bitcoin also has an annual carbon footprint – 45.34 megatons of carbon dioxide – that rivals that of Hong Kong.

If “decarbonizing the cryptocurrency industry in record time” is the goal of the Crypto Climate Accord, the challenges it faces will be comparable to those of the signatories of the Paris Agreement, which aims to keep the earth from more than 1.5 degrees Celsius above the earth Warning value warns industrial levels. Global carbon emissions are reported to have dropped 6.4% over the past year as the effects of the pandemic curbed or halted many industries. However, that still fell short of the 7.6% cut estimated by the United Nations Environment Program to meet the numbers set in the Paris Agreement.