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Energy Web, RMI, and the Alliance for Innovative Regulation (AIR) recently unveiled the Crypto Climate Accord, an initiative committed to making the cryptocurrency industry 100% renewable by 2030. The Accord accounts for leading organizations in the financial technology arena, and has support from the United Nations Framework Convention on Climate Change (UNFCCC) Climate Champions.
Cryptocurrency is becoming more mainstream and integrated into the economy. Goldman Sachs and Morgan Stanley already offer bitcoin funds to wealthy clients, PayPal enabled merchants to accept crypto payments, and S&P Down Jones launched a crypto index. These and other developments in the industry are likely to push the adoption of cryptocurrencies further.
Public blockchains that create cryptocurrencies use more electricity per transaction than any other method. According to an Energy Web estimate last year, the top five public blockchains use up to 170 terawatt hours of electricity per year, more than the whole state of New York. As crypto adoption increases, this number will only go up.
Bitcoin and Etherum miners and investors claim that a significant percentage of the energy used is renewable, but the figures are self reported by miners. They have strong incentives to fib. Many institutions have ESG targets, so claiming the energy is mainly renewable, institutions might think it’s not bad. More institutional money means higher prices and wealthier miners.
Even with 100% renewables, it’s also important this doesn’t crowd out other productive uses for that energy, as pointed out by Bill Gates.
There are already initiatives addressing the matter. XRP Ledger, for example, is to become the first carbon-free blockchain. The organization purchased energy attribute certificates to cover this year’s emissions, and money will go towards renewable energy providers. However, at an industry level, a coalition is needed to promote collaboration and scalable solutions.
The Accord has set out three main objectives in decarbonizing the industry: enable all blockchains to be powered 100% by renewable sources by 2030, develop an open-source standard to account for emissions in crypto, and achieve net-zero emissions across the whole industry by 2040. Accord supporters currently include more than 20 organizations, including Consensys, Ripple, EDF, and XRP Ledger.
Energy Web has the open-source software and expertise to lead industry-wide decarbonizing. AIR will engage with policymakers and regulators to develop energy sector-related policies
“We have the technical solutions required to decarbonize blockchains. What the industry doesn’t yet have – and needs – is a concerted effort,” said Walter Kok, CEO of Energy Web. “The Accord marries the right tools and public structure needed to achieve our goals, and we hope recognition from our global supporters inspires others to join in shaping our renewable energy future.”