Ethereum reduced its emissions by 99%. But the 1%?

Cryptocarbon: Investing in carbon offsetting projects, or by changing business activities to follow the development of sustainable models, can make crypto even more sustainable, says Alexis Normand, co-founder of Greenly.

Cryptocurrency has taken the market by storm. It’s a revolutionary way to pay for things without having to consult a third party in the middle of a purchase. Replacing popular contactless payments like Venmo or Apple Pay, cryptocurrency has gained interest from investors and consumers alike.

As interesting and innovative as the concept of cryptocurrency is – it is not that green or good for the future of the environment.

Although cryptocurrency is not good in the fight against climate change, it has presented a unique set of benefits. For example, one of the biggest benefits of implementing the use of cryptocurrency is to improve the corrupt use of traditional currencies. Basically, cryptocurrency allows the power of the currency to remain in the hands of the user, while the twenty dollar bill in my wallet today may not be worth the same amount tomorrow.

But does the sustainable value outweigh the harmful effect that cryptocurrencies have on the environment?

Cryptocarbon: The Numbers Behind Crypto Mining

Cryptocurrency requires mining, extensive use of energy, and definitely does not meet the requirements to reach net-zero emissions by 2050. For example, Bitcoin, one of the most popular cryptocurrencies, uses almost 91 terawatt-hours of electricity annually, although , says latest news that it uses 10.9% renewable energy. That’s more electricity than Finland needs to power its country of 5.5 million people for an entire year.

Ethereum, the second largest cryptocurrency company behind Bitcoin, recently completed the “merger” in an effort to reduce their energy usage. Long story short, we are still waiting to see the beneficial results of the project which involved cutting out the middle man – or the cryptocurrency miners.

Mining is the most energy-intensive and highest carbon-emitting component of the process of harvesting cryptocurrency. By eliminating the need for mining, Ethereum is trying to position itself as a sustainable crypto giant. But it still has a lot of work to do before it was seen as one.

The amount of energy used by cryptocurrency companies is alarming. Ethereum alone is responsible for 0.34% of the world’s total energy. While this may not seem like a big deal, it puts a strain on the planet’s limited energy supply. It is commendable that a cryptocurrency company like Ethereum is trying to use blockchain technology to reduce their emissions. But the entire cryptocurrency sector needs to expand its sustainability efforts.

In 2020 alone, Ethereum was responsible for producing 16.6 million tons of carbon dioxide emissions. For Ethereum to compensate for the emissions they created, it would be necessary to plant over 84 million trees.

Is there a solution to all this?

So, what can be done for cryptocurrency companies to reduce their massive carbon footprint? Unfortunately, cryptocurrency companies must realize that reducing emissions alone will no longer be sufficient. An industry used by so many, diverse organizations – should be aware that no mitigation tactics will allow humanity to reach net-zero emissions.

All companies, businesses and individual endeavors are going to create some carbon footprint. That part is inevitable – but what companies and individuals do to offset their own emissions is not.

It is never a waste of time for one to try to reduce their own emissions. Therefore, cryptocurrency companies like Ethereum should not stop seeking new methods to reduce electricity. However, they should strive to think outside the box. Cryptocurrency companies like Ethereum need to find ways to contribute to carbon offsetting projects to help reduce emissions externally.

Crypto carbon: Wait to invest sustainably?

Many people invest in cryptocurrency simply because they want to make money. With so many cryptocurrency users seeking financial gain, why aren’t more cryptocurrency companies seeking to align themselves with the ideals of impact or socially responsible investing?

Impact investments are investments that are made to create favorable social and environmental effects in addition to a lucrative financial return. Impact investments can be made in both developed and established markets. Socially responsible investment, on the other hand, refers to a type of investment where the stakeholder is also interested in creating beneficial social or environmental change – but goes one step further. The potential investment must comply with several environmental requirements, such as an ESG score or a company achieving an ISO 14001.

Cryptocurrency may not completely change the model of their currency to comply with these investments. But they can certainly promote the main missions – to contribute to a social cause in connection with their investments. For example, cryptocurrency companies can create donation programs to invest in cryptocurrency. This is in connection with regular carbon compensation projects that help to reduce excessive emissions. These can include reforestation, sustainable travel and helping developing countries establish carbon neutrality.

CO2 compensation projects

A carbon offset project is a financial contribution to another organization that seeks to reduce excessive emissions elsewhere. Companies like Ethereum can dedicate themselves to more carbon offsetting projects. They can also be alert to discover new sources of energy to sustain their business in a more sustainable way. Then cryptocurrencies can start to make a real difference in emissions.

These companies can create programs where if they invest in X amount of cryptocurrency, then the cryptocurrency company itself will donate X amount of funds to a carbon offset project. This can be chosen by the individual who invests in the cryptocurrency. In this way, cryptocurrencies remain relative. And they also use their available profits to do the world some good.

Companies like Bitcoin and Ethereum are transversal companies that are not in the same position as startups looking for exponential growth. These cryptocurrency companies are already there. They all have the resources to implement more concrete measures to reduce emissions that are made outside their own area of ​​operation. As explained earlier, this can be done by investing in carbon offsetting projects, or by changing their business activities to follow the development of sustainable models.

About the author

Alexis Normand, co-founder and CEO of Greenly, a provider of carbon assessment and accountability solutions for small to large companies. He is an entrepreneur, Techstars alumni at Embleema, former Withings Head of B2B, and Nokia Digital Health Product Manager.

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