Core ideas:

• Green and low-carbon goals are the key to global environmental governance, and it has become a trend for the crypto industry to join green actions.

• Switching to renewable energy can significantly reduce carbon emissions, but it will not achieve carbon neutrality, and crypto companies need to do more.

• For crypto companies to achieve carbon neutrality, they need to formulate and implement carbon inventory, carbon emission reduction, and carbon offset plans in sequence. Voluntary, decentralized, and diverse decarbonization activities will help achieve green goals more efficiently and conveniently.

Over the past year, the huge wealth effect of the crypto market has attracted unprecedented attention from investors, while also causing global governments and society to worry about the energy consumption of cryptocurrencies. ESG pressure and the regulatory impact brought about by global carbon neutrality goals have become one of the main reasons for the recent decline in the cryptocurrency market.

On the positive side, the crypto market has begun to respond positively, especially the crypto mining industry, which has been hit hard, and has begun to turn to renewable energy and pledged to take other measures to achieve carbon neutrality goals.

This article will combine existing examples to strive to sort out the cognitive consensus and specific ways of green and low-carbon transformation of the crypto market, especially to provide a valuable mining "green guide" for Chinese miners who are about to turn to overseas.

1. Green in Action

Global Action

Managing carbon dioxide emissions is key to the global response to climate challenges and is also a key focus for crypto practitioners. Let’s first understand the policy environment for global carbon action.

Globally, the realization of the goal of limiting carbon dioxide emissions mainly depends on the carbon emission pricing mechanism and the application of low-carbon technology. The more mature carbon emission pricing tools are "carbon tax" and "carbon market", and the two are rarely used interchangeably. The former means to levy environmental taxes on carbon emissions. More than 20 countries or regions, including Canada, Australia, the United Kingdom, and the United States, have implemented carbon tax policies. The latter refers to the establishment of a market pricing mechanism for carbon quotas. Countries or regions such as the European Union, China, and South Korea are adopting carbon trading methods.

Table 1 Characteristics of carbon tax and carbon emission trading system

Source: Huabao Securities, Babel Finance

In regions such as Europe and the United States where environmental awareness and environmental laws are most mature, there are a large number of authoritative third-party service agencies that can provide a series of consulting and notarization services to crypto companies.

Taking Europe as an example, there is the world's most mature carbon emissions trading system (EU-ETS), the largest carbon trading markets European Climate Exchange (ECX), GreenX (CME), European Energy Exchange (EEX), and Nordic Power Exchange (Nord Pool). The British Standards Institution (BSI) has formulated the world's first carbon neutrality certification PAS 2060 international standard. The UK Carbon Disclosure Project (CDP) provides classic standards for carbon emissions disclosure methodology and corporate processes. There are also many tripartite organizations that provide carbon offset solutions, such as ImpactScope, headquartered in Geneva.

Europe has now abolished the offset mechanism and implemented a market stabilization reserve mechanism to reduce carbon quotas. It plans to implement a paid allocation of all quotas in 2027 and is exploring the implementation of a unified carbon tax to make up for the shortcomings of the EU carbon trading mechanism.

Unlike Europe's strict and unified carbon management, the United States implements a regional voluntary emission system and a total control trading system. There are large differences in the United States in terms of environmental protection. States on the east and west coasts of the United States are more supportive of environmental protection, but energy states in the Midwest are more resistant. For example, Texas, which is home to many crypto companies, has appealed against carbon emission restrictions.

In the United States, the institutions responsible for quota auctions include the Regional Greenhouse Gas Initiative (RGGI) and the Western Climate Accord (WCI), the carbon registration institutions responsible for carbon footprint business include the American Climate Registry (TCR), the institutions responsible for carbon offset include the Climate Action Reserve (CAR), the institutions responsible for carbon registration include the American Carbon Registry (ACR), the institutions responsible for carbon standards include the Verified Carbon Standards Association (VCSA), and the institutions responsible for trading include the Chicago Climate Exchange (CCX), GreenX, etc.

The Asia-Pacific region is in the initial development stage in this field. Taking China as an example, China has set the "3060" goal of carbon peak and carbon neutrality (i.e. carbon peak in 2030 and carbon neutrality in 2060), and the national carbon emission trading system is scheduled to be opened in June 2021. At present, China's carbon management work is more aligned with EU standards. However, considering China's current policy on cryptocurrencies, we will not discuss it in depth here.

Of course, we need to see that the formulation and implementation of existing decarbonization policies are more targeted at industry, and crypto activities are not included in the reference system. Therefore, for crypto companies, they can take the initiative to carry out actions with clearer green standards across regions, or report green actions to local relevant institutions or organizations. The current lack of green standards in the crypto industry has made it possible for the crypto industry to implement more green solutions, which is also a manifestation of decentralization.

Crypto industry taking action

More and more crypto organizations are taking action and joining the green movement, trying to provide solutions:

• Crypto Climate Agreement plans to run entirely on renewable energy

The Crypto Climate Accord, jointly established by the Energy Web Foundation, the Rocky Mountain Institute, and the Alliance for Innovative Regulations, and with 45 members including Ripple, CoinShares, Compass Mining, etc., promises to achieve net zero emissions for the global cryptocurrency industry by 2030.

• Crypto Carbon Protocol pledges to achieve carbon neutrality by 2040

The Crypto Carbon Accord was established in May this year, pledging to achieve carbon neutrality in the cryptocurrency mining industry by 2040.

• Wrapped Launches Green Bitcoin

Wrapped launches Bitcoin-based green asset EcoBTC on the Celo blockchain.

In addition, many crypto companies are actively catering to this trend in their own ways:

• OSL Exchange buys carbon credit token CET

OSL, Hong Kong's first approved exchange, announced the purchase and cancellation of voluntary carbon credits on the AirCarbon Exchange ("ACX") to fully offset its BC Group's 647 tonnes of carbon footprint over the three years from 2018 to 2020.

• Listed mining company Argo to launch pure clean energy mining pool

Argo Blockchain says it will start building a new bitcoin mining pool using hydroelectric power.

• Greenidge announces carbon neutrality in early June

Bitcoin miner Greenidge has been purchasing Regional Greenhouse Gas Initiative (RGGI) quotas since 2017 and has also invested in renewable resource projects, claiming to have achieved carbon neutrality in early June this year.

• Crypto market maker GSR pledges to make all its business carbon neutral

Crypto market maker GSR has pledged to buy carbon credits from the Fortaleza Ituxi project, whose mining operations are already partially powered by hydroelectric power.

• BitDeer invests in building a low-carbon energy mining pool

BitMining (BTCM.US) signed a contract with Dory Creek, a wholly-owned subsidiary of Bitdeer (lnc), to build a 57.2-megawatt mine in Texas, using more than 85% clean energy and low-carbon environmentally friendly energy.

It is undeniable that although there are differences and disputes among people from all walks of life in the crypto market about the so-called waste of fossil resources and emission of greenhouse gases (GHGs), the trend of green action is unstoppable.

Based on the above measures, green measures include establishing organizational agreements, switching to clean energy, investing in renewable energy projects, purchasing carbon credits, developing low-carbon token projects, etc. We will focus on these specific measures in the third part.

2. Discussion on Green Consensus

This section mainly discusses the carbon neutrality background of current green actions and points out some cognitive misunderstandings.

In order to prevent global warming, countries around the world signed the Paris Climate Agreement in 2015, agreeing to control the global temperature rise within 2 degrees by the end of this century and strive to achieve the goal of 1.5 degrees. To this end, all countries must propose and achieve their own carbon reduction and carbon neutrality plans.

Among them, carbon neutrality refers to offsetting the carbon dioxide emissions directly or indirectly generated by human activities through means such as afforestation, energy conservation and emission reduction, and industrial adjustment, to achieve "zero emissions" of carbon dioxide.

In this context, criticisms about crypto mining consuming energy and emitting greenhouse gases have become rampant. Especially for environmentalists who question the value of the Bitcoin network, maintaining such a huge power consumption will consume a large amount of non-renewable energy and emit a large amount of carbon dioxide, which will cause air pollution and rising temperatures.

According to statistics from Digiconomist, the current power consumption for mining one Bitcoin is 1595.48 kWh, with a carbon footprint of 757.85 kg of carbon dioxide. Bitcoin emits about 62.61 tons of carbon dioxide per year, which is comparable to the carbon footprint of Serbia and Montenegro, and consumes about 131.80 terawatt hours of electricity, which is comparable to Argentina's electricity consumption.

Figure 1 Bitcoin Energy Consumption Index

Source: BitcoinEnergyConsumption

Green transformation is not as simple as switching to green energy. If crypto companies want to improve the negative impression of public opinion and supervision, they must first answer the following questions:

• What is green energy? What are the clean energy sources? What clean energy sources can be used for crypto activities?

• By using 100% clean energy, has the goal of carbon neutrality been achieved?

• Are there any low-cost, sustainable green transformation solutions for reference?

What is clean energy

There is no unified consensus on the exact definition of green energy, or clean energy, at home and abroad, but the basic meaning includes three points: first, it refers to the technical system of energy utilization; second, cleanliness must meet certain emission standards; finally, the economic feasibility of practical applications must also be emphasized.

According to the "Clean Energy Blue Book·International Clean Energy Industry Development Report (2018)", renewable energy generation such as hydropower, wind power, solar power, as well as nuclear power and natural gas all fall into the category of clean energy, but fossil energy such as clean coal and clean oil should be excluded.

We have seen that some mines, exchanges, investment institutions, etc. have begun to use clean energy and participate in investing in/developing renewable energy projects. These are the inevitable paths to green transformation.

Clean energy and carbon neutrality

Many news reports mention that crypto companies have adopted green energy mining to achieve carbon neutrality. This is actually a misunderstanding, because switching to clean energy for mining may significantly reduce carbon emissions, but it does not achieve zero carbon emissions, let alone produce carbon offset effects.

According to the article "Evaluation of Nuclear Power as a Proposed Solution to Global Warming, Air Pollution, and Energy Security" published by Mark Z. Jacobson, a professor at Stanford University, the carbon emissions of solar energy, wind energy, ocean energy, and geothermal energy are more than 80% lower than those of coal-fired power with the same power generation. Natural gas has the highest carbon emissions among clean energy sources. In terms of carbon emission equivalent range, natural gas may even exceed coal-fired power.

Table 2 Carbon dioxide emissions from power generation of various energy sources

Source: stanford.edu

Therefore, the use of renewable energy will significantly reduce carbon emissions, but clean energy such as nuclear energy and natural gas does not seem to reach the point where carbon emissions can be significantly ignored.

Although crypto activities cannot achieve zero carbon footprint at this stage, this does not prevent us from using multiple solutions to maximize the reduction of carbon emissions. After all, any economic activity has an energy cost. What we should discuss is the practical issue of how big the cost is, rather than throwing the baby out with the bathwater or shutting it down.

It is foreseeable that the pace of clean energy replacing fossil energy is accelerating, and technological means are making the cost of decarbonization lower and lower. The series of green action combinations being implemented by many practitioners will find the optimal solution to question 3.

3. The road to green transformation

When researching this topic, we referred to existing green examples in the crypto industry, as well as the low-carbon initiatives of comparable Internet companies such as Amazon and Microsoft. Although a complete and unified green consensus has not yet been formed, this does not prevent us from proposing a universal solution framework and combination of solutions.

Generally speaking, crypto companies need to understand the relevant policies or public opinion requirements of the place where they operate or are registered, calculate their own carbon footprint over a period of time, and invite third-party organizations to conduct audits and verifications. They then formulate targeted carbon reduction and carbon offset plans based on this, and issue decarbonization commitment statements and implementation statements based on actual conditions.

Step 1: Carbon Inventory

Carbon footprint inventory is the basis for formulating practical and specific carbon emission reduction and carbon compensation plans.

Encrypted enterprises can entrust external certification agencies or conduct emission source inventory and data aggregation on their own, calculate carbon emissions over a recent period of time, and invite third-party qualified agencies to conduct inspections.

The scope of carbon emissions is generally calculated by referring to Scope 1, Scope 2 and Scope 3 proposed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD) in the Greenhouse Gas Protocol (GHGP).

Specifically for crypto companies, it can be understood as:

• Scope 1: Emissions directly from the operations of the infill project;

• Scope 2: Emissions from purchased energy (primarily electricity);

• Scope 3: Emissions include all other activities outside of the crypto company’s direct operations.

When calculating the carbon footprint of crypto-business activities, the focus should be on Scope 2, which is to account for the sources of power consumption and the corresponding carbon emissions.

From the perspective of the application of global carbon footprint verification standards, there is only one public specification, PAS 2060, issued by the British Standards Institution (BSI), and another international standard on carbon neutrality, ISO 10468, which is still in the early drafting stage. We can develop carbon management and carbon neutrality software systems in accordance with common standards such as PAS 2060 and ISO 10467, or directly entrust institutions with the standard license to carry out carbon footprint measurement and notarization work.

Crypto companies can hire regional third-party carbon footprint agencies or well-known large-scale consulting service agencies to achieve better endorsement effects. These agencies not only undertake carbon footprint measurement work, but also often provide notarization and auditing, and even carbon offset services. Currently, references include the UK's Carbon Trust, British Standards Institution (BSI), Intertek Group (ITS), Switzerland's SGS, Germany's TÜV Rheinland Group, DEKRA, France's Bureau Veritas (BV), Spain's Applus+ Laboratorie, the United States' UL, China Quality Certification Center (CQC), Hong Kong's CMA Testing, Low Carbon Asia (CCA), and their branches or authorized agencies around the world.

Take the e-commerce giant Amazon as an example. Amazon built its own carbon footprint data analysis system. Amazon referred to the international standard of the Greenhouse Gas Protocol (GHG Protocol), used the product life cycle assessment (LCA) evaluation model and Amazon Web Services (AWS) big data technology to process operational and financial records to calculate carbon footprints.

The certification agency APEX independently audits and verifies the accuracy of Amazon's reported greenhouse gas emissions and the basic systems and processes used to collect, analyze and review information based on the ISO14064-3 verification protocol, and issues a report.

Among them, Amazon has developed five accounting models for this purpose, and the one related to crypto mining is the electricity emission model. Amazon collects usage data from facilities around the world and processes data from utility invoices to understand the use of electricity and fuel. When actual electricity consumption data is not available, electricity consumption is estimated by dividing the paid electricity bill (US dollars) by the regional average electricity price (US dollars/kWh). Carbon emissions are then calculated by multiplying the electricity consumed by the facility (kWh) by the emission factor associated with the regional power grid combination (CO).

In addition to referring to the above carbon emissions calculation method, crypto companies can also use a more simplified model to calculate carbon footprint.

For example, New York-based crypto exchange Gemini calculated the proportion of bitcoin in its custody to the total circulating supply of the entire network, and then referred to the upper limit average of Bitcoin's annual electricity consumption published by the Cambridge Bitcoin Electricity Consumption Index (CBECI) and the Digiconomist Bitcoin Energy Consumption Index, from which it derived the relevant amount of electricity used by Gemini in the Bitcoin network. It then multiplied the amount by the annual carbon footprint of the Bitcoin network disclosed by Digiconomist to estimate Gemini's carbon footprint for the past six months. Finally, based on the emission cost per ton of carbon dioxide, it calculated the carbon emission cost of using the Bitcoin network, which is about $4 million.

In short, if the place of registration or operation has relatively clear green regulatory requirements, then carbon reduction work should be carried out in accordance with the local designated third-party agency. Otherwise, you can hire an agency that meets the standard licensing qualifications mentioned above, or even calculate according to the relevant models yourself, and actively move closer to clearer regulatory requirements.

Step 2: Carbon reduction

Carbon emission reduction is the most important task for crypto companies to achieve deep green development. Specific measures to reduce carbon equivalent emissions include but are not limited to:

• Gradually use alternative clean energy (such as hydropower, solar energy, etc.);

• Invest in, develop or participate in green blockchain projects;

• Use machines and facilities with higher energy efficiency;

• Participate in more energy-efficient consensus mechanisms and solutions (such as POS mechanisms, etc.).

We focus below on the first two points.

1) Use clean energy

The biggest contribution to carbon emission reduction is the use of alternative clean energy. Among the overseas destinations for Chinese miners, in addition to Central Asia, which is dominated by traditional thermal power, there are abundant clean energy in Northern Europe, North America, Russia and other places, which are also the areas where crypto mining is more active and concentrated.

At present, the most used clean energy in crypto mining is hydropower. According to a study by the Cambridge Center for Alternative Finance (CCAF), about 76% of crypto mining uses renewable energy, of which hydropower accounts for 62%. Hydropower has a wide supply area and is cheap per unit. The mining computing power in Sichuan, China can account for 10% of the entire network during the flood season. In addition to China's Yunnan, Guizhou and Sichuan regions, the Caucasus, eastern Canada, and Northern Europe also have rich hydropower resources.

We have compiled a detailed table of clean energy, as shown below: The five Nordic countries are rich in hydropower, geothermal energy and wind energy, and North America, especially Texas, is rich in natural gas and wind energy. These are all suitable areas for Chinese miners to go overseas and transform to green mining. As for nuclear energy, its use threshold is too high, and the industry maturity of solar energy, biomass energy, ocean energy and other power generation is relatively low, and there is no possibility of large-scale use in the short term.

Table 3 Distribution areas and advantages and disadvantages of green energy in crypto mining

Source: Babel Finance compiled from public information

In short, from the perspective of green energy alone, Northern Europe, North America, Eastern Europe, etc. may be more suitable regions for mining.

2) Invest, develop or participate in green blockchain projects

We have noticed that more and more crypto institutions and practitioners have begun to invest, develop or participate in green blockchain projects. There are no uniform standards and requirements for these activities, but these efforts will help enhance the industry's decarbonization effects.

• Ripple has pledged to reduce its carbon emissions to zero by 2030. The company has created a tool that allows other blockchain companies to purchase clean energy to power their networks. The XRP Ledger Foundation will be the first to use the tool to offset the carbon emissions of XRP.

• Former Bitcoin.com CEO Stefan Rust has launched venture capital fund Sonic Capital to invest in blockchain startups for carbon credits.

• Wrapped combines Bitcoin and MOSS.Earth Carbon Credits (MCO2) in one digital asset, launching Eco BTC (eBTC). Users of eBTC can trade assets that are backed 1:1 by Bitcoin.

• The Universal Protocol Alliance announced the launch of Bitcoin Zero (BTC0), a carbon-neutral Bitcoin issued on the Ethereum network through a wrapper. Bitcoin Zero combines 1 BTC with 10 tons of CO2 recovered from REDD+ rainforest projects certified by Verra and other international standard bodies every time BTC0 is minted.

• The Sustainable Bitcoin Standard Initiative (SBS) has launched the Green Bitcoin Standard Certification, planning to issue SBCs (Sustainable Bitcoin Certificates) for Bitcoin produced using electricity from renewable energy, and to issue SBCs for Bitcoin produced using electricity from non-renewable energy after carbon compensation.

• US mobile payment giant Square has announced a $10 million Bitcoin Clean Energy investment plan to promote the use of clean energy in Bitcoin mining.

Step 3: Carbon Offset

As mentioned earlier, even if we completely switch to clean energy, we will only reduce carbon emissions equivalently and cannot completely achieve the zero-carbon goal. Therefore, many crypto companies can also participate in various carbon absorption and carbon capture actions to offset the carbon emissions that cannot be reduced.

These programs include, but are not limited to:

• Directly purchase corresponding environmental rights, such as carbon credits or carbon sink assets;

• Pay carbon tax;

• Directly invest in, develop or participate in renewable energy projects, carbon capture and storage (CCS) projects;

• Participate in ESG principle activities such as afforestation and wetland restoration.

It should be added that both carbon reduction and carbon compensation should be certified and publicized by a third-party organization. For example, if a crypto mining company in North America plans to purchase offset credits (ROC, each ROC represents a certified reduction or storage of 1 ton of carbon dioxide) from the Offsets Marketplace disclosed by the Climate Action Reserve (CAR), it should first obtain a greenhouse gas emission inventory report issued by a verification agency, which should be approved and publicized by the California Registry, a subsidiary of CAR, and finally a third-party agency should certify and publicize its carbon neutrality compliance to eliminate the influence of the impartiality of the consultation and certification by other agencies in the previous steps, and disclose it in a timely manner for public supervision.

Figure 2 Details of cancellation of carbon credits purchased on OSL Exchange

Source: Verra

However, in practice, crypto companies do not need to make carbon compensation work too complicated and cumbersome, because decarbonization work is in the early stages of development and is more voluntary, decentralized and diverse. As long as it can reduce carbon emissions, various carbon compensation work can be tried.

1) Purchase environmental rights such as carbon quotas or carbon sink assets

Let’s get back to the topic of purchasing carbon rights. In addition to directly purchasing carbon quota products from official trading institutions (cap-and-trade market), crypto companies are more likely to choose to purchase carbon credits from green organizations with higher credibility.

Because the official carbon price is high and fluctuates greatly, the preferred option for crypto companies is to directly purchase unofficial carbon products with lower costs. As shown in the figure below, the carbon price in the California market has remained above $160/ton for the past two years, while most unofficial carbon prices are below $20/ton.

Figure 3 Monthly sales price and transaction volume of carbon credits in California, USA

Source: ca.gov

For example, Greenidge, a New York-based bitcoin miner and power plant, has been purchasing allowances from the Regional Greenhouse Gas Initiative (RGGI) since 2017. Greenidge also recently announced that it will begin offsetting greenhouse gas emissions from bitcoin mining on June 1 by purchasing a portfolio of carbon offset credits, each of which will be reviewed and certified by the American Carbon Registry (ACR), Climate Action Reserves (CAR), and Verra.

Another way to offset carbon emissions is to purchase carbon tokens issued on the blockchain network, and these tokens should be verifiable, quantifiable and destructible. Generally speaking, when each token is purchased and destroyed (sent to an inaccessible address), it is equivalent to offsetting 1 ton of carbon dioxide.

For example, hedge fund One River applied to the SEC to create a carbon-neutral Bitcoin ETF. According to the prospectus, One River will purchase Ethereum-based MCO2 crypto tokens from environmental platform MOSS.Earth.

In addition, institutions such as crypto hedge fund Argentium, crypto market maker GSR, and Latin America's largest exchange Mercado Bitcoin have also purchased MCO2 on MOSS.Earth, committing to achieving carbon neutrality in their businesses.

MCO2 is a carbon credit token issued by the MOSS platform. The credibility of this currency comes from the Amazon rainforest protection projects certified and audited by many third-party organizations, including Verra's VSC standard and the CCB standard of the Climate Community Biodiversity Alliance (CCBA).

Since its launch, MCO2 has remained below US$10 per coin for a long time, and its price fluctuations are far smaller than the carbon price in the California carbon market.

There are two MOSS registration platforms. The main platform (https://moss.earth/) is open to individual and entity users, while the B2B platform (https://business.moss.earth/) is dedicated to serving institutional users. According to public reports, MOSS claims to be the largest carbon credit platform in the industry, accounting for 20% of the global market share.

According to the audit report issued by the US accounting firm Armanino LLP, the operation mode of the token is roughly as follows: Moss purchases carbon credits from projects certified according to the VCS standard. In Verra Resistry, Moss allocates carbon credit batches to sub-accounts of retired credits and active credits. The former is used for carbon credit allocation of major customer retail platforms, and the latter is used for B2B platforms. After approval, the token is minted through the Moss smart contract and then transferred to Moss's treasury wallet address, and then transferred to customer wallets when purchased. The Moss.Earth smart contract will update the number of tokens.

Figure 4. MCO2 token transfer records on the Ethereum chain

Source: Etherscan.io

MCO2 is not the only optional carbon coin. There are also carbon credit tokens such as UPCO2 (Universal Carbon) issued by the Universal Protocol Alliance and 4 carbon credit tokens issued by the AirCarbon Exchange.

Table 4 Details of some carbon credit tokens

Note: Verra is the not-for-profit organization that develops and manages the Verified Carbon Standard.

Source: Babel Finance compiled from public information

2) Pay carbon tax

This is an indirect green transformation plan. In the existing publicly available information, we only see that cryptocurrencies are subject to income tax, profit tax, value-added tax, consumption tax, etc. as specific virtual commodities or assets, and we have not found any information on crypto companies paying carbon emission taxes.

Carbon taxes have limited effectiveness on the bitcoin mining industry, according to simulation results in the paper “Carbon emissions from bitcoin blockchain operations in China and an assessment of sustainability policies” published in Nature Communications.

However, in the eyes of many environmentalists, even if crypto companies take the initiative to pay carbon emissions taxes, this is still a practice of self-punishment, a typical "greenwashing" behavior, and not truly achieving green.

But in the long run, global green policies may force emerging digital companies such as crypto companies to make major changes in tax policies, thereby affecting their payment of carbon taxes in countries or regions that implement carbon taxes.

3) Investing in, developing or participating in green energy projects and carbon capture and storage (CCS) projects

We see that many crypto companies or individuals are directly investing in, developing or participating in renewable energy projects. These spontaneous actions are not intended to establish green standards for the industry, but to better implement low-carbon goals based on the normative preferences of their respective fields.

• Canadian blockchain asset management platform Invictus Capital has established the Emerging Markets Solar Fund to develop utility-scale greenfield solar projects.

• NFT project CryptoTrunks plans to donate part of the proceeds from its genesis trees designed by crypto artist Reuben to Bull Run, a reforestation project in Belize.

• The two major exchanges, FTX and BitMEX, have announced their commitment to carbon neutrality. FTX said it would donate $1 million to offset the blockchain resources it uses, and BitMEX promised to donate $0.0026 for every $1 in blockchain fees generated to offset its carbon footprint.

Summarize

Against the backdrop of the global promotion of carbon peak and carbon neutrality, green transformation is an inevitable choice for the compliant and healthy development of the crypto industry. This article makes a preliminary discussion on how crypto companies can effectively carry out carbon inventory, carbon emission reduction, and carbon offset, but this may just be the beginning.

On the one hand, crypto companies need to balance financial planning, the proportion of clean energy use, the proportion of carbon credit purchases, etc., formulate a set of flexible and effective response plans, and orderly promote carbon information verification, carbon data management, emission reduction and offset plan implementation, public relations communication and other work.

In fact, the green transformation is still in its early stages. Self-disciplined green actions are not only worthy of encouragement and promotion, but can also explore a variety of green solutions and play a positive feedback role in leading demonstration.

On the other hand, carbon standards and carbon management systems combined with blockchain technology will greatly accelerate our transformation. The current green transformation standards and management solutions are derived from the centralized world, and have defects such as node centralization, limited applicable boundaries, and inconsistent standards. Blockchain is naturally transparent, tamper-proof, and decentralized. In the future, we can explore green blockchain standards to make green actions transparent, traceable, and verifiable on the chain, and achieve low-cost and high-efficiency green results.

For example, Energy Web is currently researching and developing a global standard for tracking Bitcoin's carbon footprint. Although it is still a long way from the ultimate green goal, there is hope for the future.

Figure 5 A simple questionnaire to determine carbon emissions and online donation of carbon credits

Source: Climate Vault

Since its birth, Bitcoin has experienced too much doubt and suppression, but the consensus on the value of blockchain it has led has become increasingly solid. If we expand the historical perspective of observation, the goal of green Bitcoin and the green encryption industry should be a long and difficult road, but it will surely be achieved. We look forward to this day coming soon, and this day will surely come.