New Coalition Hailing Blockchain as hub for successful climate action

Much was discussed World Economic Forum
in Davos last month — where a who’s who of government, business and civil society gathered to discuss collective solutions to the many crises facing the planet.

What went somewhat unnoticed was the presence of blockchain companies making room for themselves on the promenade outside the Forum Centre. After a year of catastrophic crashes, the crypto and blockchain sector was at Davos to prove it still should have a seat at the table – eager to get the ear of the prestigious global body that has recently recognized the future importance of blockchain and crypto.

One such vote in Davos was the recently announced one
Blockchain x Climate Leadership Network (BxC) — an activist-to-industry coalition of international stakeholders working together to define and create principles for meaningful blockchain initiatives to address the climate crisis. The network has high ambitions: To become the world’s best hub for all climate-related blockchain efforts. Rather than reinventing the wheel, BxC will act as a superstructure supporting existing coalitions and working groups in the blockchain space to build use cases for blockchain climate projects.

The partnership was founded by Solana Foundation and
Ripple in the crypto space, with carbon-offset marketplace Regen Network and solutions accelerator
Climate collective as support partners. The
Global Blockchain Business Council (GBBC), BxCi
(earlier Blockchain Infrastructure Carbon Offset Working Group), and Eqo Networks — the parent company of
Ocean Plastics Leadership Network
(OPLN) — will lead BxC.

BxC is modeled after Eqo Networks’ industry-to-activist network strategy, which serves as the backbone for both BxC and OPLN.

BxC was conceived in Greenland in 2022. After its inception, BxCi convened a group of stakeholders representing major crypto and environmental organizations in Colombia. They created several working groups to develop best practices for crypto engagement in carbon market registries, standards, transparency, policy, regenerative finance and emerging markets. These working groups formed the backbone of BxC.

“BxC is designing and supporting a number of blockchain and climate-related working groups with the intention of driving tangible on-chain innovations that address core needs across web2 and
web3 actors,” said Chris Krohnco-founder and CEO of BxC.

BxC convened working groups explore climate-related use cases for blockchain technology and unite separate groups to address the climate crisis, with the ultimate goal of connecting web3 technologists and Fortune 500 companies.

Working groups cover a range of topics – including decentralized accountability frameworks, NGO capacity building, forward contracts, web3 carbon accounting and climate data. In addition, BxC invests in industrial laboratories focusing on ecosystem services, markets, ESG reporting, supply chain and scope 3 transparency.

“These groups go far beyond discussion and broad exploration, and instead are designed to promote concrete development, testing and large-scale industrial pilots with real-world applications,” says Krohn.

Proof of Work vs Proof of Stake: A Tale of Two Codes

“Proof of work, which is how Bitcoin works, relies on really massive computers basically competing with other massive computers to solve algorithms to produce Bitcoin,” said Dave Fordfounder of OPLN and co-founder and board director of BxC.

Assets created on blockchain (such as cryptocurrency) rely on consensus mechanisms to prove that the entity has value. For proof-of-work crypto, this consensus currently comes at the price of a disproportionately high carbon footprint that only benefits a select few.

Blockchain has an image problem due to its association with cryptocurrency – much of which famously and catastrophically collapsed through 2022. Cryptomining is responsible for around 0.3 percent of global greenhouse gas emissions, largely a result of fossil-fueled energy and the revival of fossil fuel resources to power the sector. The Ethereum the platform has recently switched to a less energy-intensive consensus mechanism.
Green peace
pushing now Bitcoin to “Change the code, not the climate” and switch to a less energy-intensive consensus mechanism called proof of stake.

Proof of Stake does not rely on competing supercomputers and dirty energy, but decentralized and distributed computing that is less energy demanding than Proof of Work. BxC’s current and most pressing dilemma is distinguishing between these two fundamental blockchain mechanisms and championing proof of stake as a potential climate boon.

“The biggest macro challenge with anything blockchain related is overcoming these negative crypto narratives,” Ford said. “You have this general misconception that all crypto and thus blockchain is bad for the environment; and that’s just not true.”

Cryptocurrency aside, there are a myriad of possible cleantech-related applications for blockchain – applications that BxC is convinced will fundamentally change supply chain reporting and carbon emissions.

Proof of efforts as a climate solution

Ford believes proof of stake will enable blockchain to move beyond the most harmful environmental impact and become a driver of climate-friendly solutions. He also believes that all environmental, social and governance (ESG) metrics will live on web3 technology in the next 5-10 years because blockchain allows everyone to see material history – from point of origin to shelf.

Right now, proof of stake use is largely about verification and trust in carbon markets, such as BxC partner Regen Network. Supply chain transparency is another established place for blockchain to shine.

Transparency and trust are pain points in the ESG space, and BxC believes that open ledger blockchain platforms are the secret sauce.

“Eventually, all parts of the supply chain will be traceable and transparent
[with blockchain]”, said Ford. “The world needs blockchain now to solve scope 3. Blockchain offers transparent carbon tracking that takes the smoke and mirrors out of it; so, instead of voluntary reporting, blockchain has the ability to solve greenwashing in the long term.”

Ford sees a world where there is no longer a choice between voluntary and mandatory reporting, but that everything will be transparent as standard because the supply chain will live on the web3. The transition to web3 solutions will take buy-in from major players at scale to begin the ripple effects after key stakeholders have been adopted; and this is where BxC comes in.

“We need a comprehensive understanding to move at breakneck speed if we are to have any chance of achieving the goals of the Paris Agreement,” Ford said.

As the smog of energy-intensive crypto mining settles, the possibilities for blockchain as a climate solution become clearer. As BxC and the sector strategize on use cases to save the planet, Ford suggested companies:

“Get educated as soon as humanly possible. This wave is coming and crypto and blockchain are not the same.”