Can crypto become a sustainability leader?

  • Planet Earth is facing a climate emergency and urgent action is needed to reduce emissions by 2030.
  • Crypto has the potential to help decarbonize unreliable power grids, optimize economic incentives for all, and help countries meet their climate goals.
  • Here are some examples of crypto companies that are supporting the energy transition.

The global crypto market is expected to reach $4.94 billion by 2030. A critical year for crypto, but also for the planet. According to the latest IPCC report, a zero-carbon global energy transition is urgently required by 2030, a transition that limits global warming to 1.5°C. For this to happen, there must be a substantial reduction in the use of fossil fuels, widespread electrification, improved energy efficiency and the use of alternative renewable fuels.

But the global community is falling behind in the face of the accelerating pace of climate change. And while thinking about how best to meet this challenge ensues, the most climate-vulnerable regions that have contributed the least to the problem are suffering some of the most devastating consequences.

The effects are already apparent in Nunavut, Canada, where Inuit hunters are facing survival challenges due to melting ice, warmer winters and changing weather patterns. The Arctic, home to four million people, is warming about twice as fast as the rest of the world and threatening the health and livelihoods of about a tenth of Arctic people, including indigenous groups such as as Inuit, Sami, and Chukchi.

Closer to home, in the United States, extreme weather events have led to widespread power outages and destructive storms that have crippled large segments of the country’s aging power grid. In fact, major power outages have increased by more than 60% between 2015 and 2020.

Demystifying misrepresentations

Enter crypto. While not a silver bullet, this versatile utility has the potential to help decarbonize unreliable power grids, maximize economic incentives for everyone, not just the privileged few, and encourage countries to achieve their climate goals more quickly. However, the immediate challenge in shifting the current debate about crypto’s energy consumption into a solution-focused narrative is the amount of misinformation that shrouds productivity in this area.

A recent letter sent to the US Environmental Protection Agency (EPA) on April 20 by Rep. Jared Huffman (D-California) and 22 members of Congress is a case in point. This letter raised concerns about how bitcoin mining pollutes communities and has an outsized contribution to greenhouse gas emissions. He went on to cite several false claims, namely that “a single bitcoin transaction could power the average American household for a month…and that bitcoin produces carbon emissions comparable to Greece’s annually.” I have addressed these unproductive misconceptions in this blog.

This challenge highlights the need for open-source, data-driven insights that serve as an industry-wide verifiable source of truth regarding crypto power consumption and, indeed, crypto usage. renewable energies. Particularly relevant now that the White House Office of Science and Technology Policy is writing a report of policy recommendations to address risks and opportunities regarding the crypto mining industry. Expected in August, this policy report will be one of the first case studies of the impact of cryptocurrency mining after US President Biden issued the Executive Order on Ensuring Responsible Development of Digital Assets in March.

Crypto sustainability in action

Crypto miners are unique energy buyers that provide flexible interruptible load capacity and are location independent. These qualities make crypto a strategic utility and energy buyer of last resort that can be turned on or off at any time of the day, anywhere in the world. This helps address deficiencies in renewables such as solar and wind, where the energy supply they generate is either overabundant or non-existent.

Crypto mining, by design, can put this glut that would otherwise go unused, into productive use. The net impact of this is the incentive to build more solar and wind power, thereby phasing out the use of fossil fuels more quickly. This is particularly useful given that 66% of the primary energy used to create electricity is wasted by the time the electricity reaches consumers.

One example is Lancium, which is a Houston-based energy management company dedicated to accelerating the energy transition. They build software, technical solutions and energy infrastructure that together aim to balance and decarbonize the grid. Their plan is to use the $150 million raised in 2021 to build bitcoin mines across Texas that will run on renewable energy and add more solar and wind power to the local grid.

Blockchain is a technology that enables the decentralized and secure storage and transfer of information and value. The best-known use case is for cryptocurrencies, such as bitcoin, which enables the electronic transfer of funds without banking networks. It can be a powerful tool for tracking goods, data, documentation and transactions – and could be relevant for many industries.

Blockchain involves significant trade-offs in terms of efficiency and scalability, as well as many risks that are increasingly attracting the attention of policy makers. These include the use of cryptocurrency in ransomware attacks, fraud and illicit activities, as well as the energy consumption and environmental footprint of some blockchain networks. Consumer protection is also an important and often overlooked issue with cryptocurrency. Stablecoins and decentralized applications running on blockchain technology pose risks to end users of lost funds and to broader financial stability.

The Forum has impacted the development of blockchain across industries and ensures it is used securely and responsibly by:

Contact us for more information on how to get involved.

Another example is HIVE Blockchain. It is a data center based in Boden, Sweden, which draws cheap energy from hydroelectricity producers and is now one of the largest active energy reserves on which the Swedish grid can count in case of considerable disturbances of the local power supply. The facility can quickly shut down its machinery so energy can be diverted to public use.

Companies like Lancium and HIVE Blockchain have become an asset to local power grids and have become a stable monetary source in situations where public power consumption is low and can go out during peak hours when demand for power is high. public energy is high. As grids move towards integrating higher levels of intermittent renewable resources, demand flexibility will play a critical role in maintaining grid system stability, reducing grid carbon emissions and increasing the growth of renewable energy.

Over time, the crypto mining industry will mature as it becomes more widely accepted, allowing this technology to act as a driver for new renewable developments in places that were previously considered unprofitable. Along with continued reductions in clean energy prices, crypto miners will have greater leeway to help subsidize more climate initiatives and attract investors keen to make sustainable and green investments.

Ecosystem centrality

New crypto industry leaders are reimagining what impact could look like, taking a human-centered and nature-centered design approach for climate sustainability. This space is vast and ever-changing, but a few notable examples are worth mentioning, including MOSS, which is dedicated to protecting the Amazon rainforest. Blockchain for Climate addresses the implementation of Article 6 of the Paris Climate Agreement with its BITMO platform on the Ethereum blockchain and promotes state-level certificate trading. OASA is another interesting example that takes the form of a decentralized autonomous organization (DAO) controlled habitat for humans and nature. Its mission is to turn property into stewardship, one regenerative village at a time.

We often hear about the importance of human centrality in the development of products and services, but what sets the crypto industry apart are the various ongoing efforts, as mentioned earlier, that prioritize the health and prosperity of the Earth’s biodiversity. It’s not just about “human centricity” anymore. The focus of future web3 innovation and design is, and should continue to be, “ecosystem centricity”.

According to Ribhu Ranjan Baruah, Project Manager, Biodiversity, of the World Economic Forum, “In a broad sense, technologies such as digital assets will ultimately be judged for their ability to be human and to include nature. This should be done within the contours of an ethical framework that promotes meaningful change in solving human challenges and accelerating nature-based solutions.

If the crypto community collectively works with this mindset, its global impact will more visibly demonstrate, even to its harshest critics, that the crypto industry can be a leader in sustainability, and climate-positive utility capable. to help achieve clean energy saving. .

This blog is part of a series of diaries led by the World Economic Forum’s Crypto Impact and Sustainability Accelerator (CISA), which explores policy, sustainability and social impact issues to help put in place takes a systemic, inclusive and effective approach to governance. distributed ledger technology.

Melvin B. Baillie