Cryptocurrencies, particularly Bitcoin, have received a lot of negative press in the global media due to their sustainability and negative impact on the environment in terms of energy usage. The crypto sector will most likely be thrust back into the spotlight at this week’s climate summit in Glasgow.
Some of the biggest names in the digital asset space are fighting back against what they see as unfair criticism of Bitcoin’s alleged high energy consumption and impact on global warming.
As a result, Global Digital Finance, whose members include BitMex, Coinbase Global, and Crypto.com, has called for more “data transparency around issues of sustainability” (BNN Bloomberg article published earlier today).
On Monday, the Global Digital Finance group released its own report, which established “industry-wide environmental goals” for the cryptocurrency sector to follow. The following is from a Bloomberg article:
“The report considers how to best measure digital assets’ environmental impact, delves into their social utility, and cautions policymakers against making a trade-off.”
Even as the Bitcoin price approaches all-time highs and new price discovery, the elephant in the room must be addressed. Bitcoin’s carbon footprint will be critical as companies strive to meet the Paris Agreement’s goal of limiting global warming to 1.5 degrees Celsius.
Faryar Shirzad, Coinbase’s chief policy officer, stated:
“It may be time for our industry to collaborate with established leaders in carbon accounting and reporting to create a customized, standardized framework for assessing and disclosing the climate impacts of cryptocurrency mining, trading, and holdings.”
However, estimating the Bitcoin network’s energy consumption is not so simple. According to Cambridge Centre for Alternative Finance researchers, comparing it to traditional payment systems is incorrect.
According to the Cambridge researchers, “having a reliable estimate of total power consumption is dependent on the carbon intensity of the energy source used to generate the electricity.” This would necessitate a closer examination of factors such as the location of mining facilities, or networks of computers used to process transactions, as well as seasonality.”
Within the crypto sector, some, such as BitMEX CEO Alexander Hoptner, believe that the industry should keep its own house in order by “applying a social justice lens to digital asset investing.”
The Cardano Foundation, for its part, intends to plant 1 million trees in Madagascar, as well as potentially in Kenya and South East Asia.