Crypto, A Big Polluter?
This $2.5-trillion industry will fix just that!
Welcome to surviving another week in the s̶q̶u̶i̶d̶ crypto game.
Here we discuss one of the emerging macro themes in markets and in our lifetime, climate change!
Read on below how combining crypto and sustainability can help mitigate this crisis.
SEC not likely to block a Bitcoin ETF to launch this week
Epic is open to host Blockchain games after Steam bans them
Polkadot Parachain auctions is coming soon
Coinbase to launch an NFT marketplace
TradingView has raised $298M at a $3B valuation
Treeverse recently concluded a raise at a $25M valuation
Sustainability, even after all these years, is still just a buzzword.
Conversations are always reduced to plastic straws and recycling bottles, but that’s just the tip of the iceberg! Individual action will never address the largest sources of pollution.
Sustainability could mean a lot of things in different industries but we’ll quote one of the widely used definitions:
“Sustainability is meeting the needs of the present without compromising the ability of future generations to meet their own needs”
This quote has been in circulation since 1987, more than 30 years ago!
Yet major industries are still polluting, while our aging electricity grid and structures are leaking energy, and our cities are inefficient.
How can we force action on the climate crisis?
TradFi vs Crypto: Sustainable or not?
One of the criticisms that people are often throwing against crypto and NFTs is their unsustainable energy consumption.
For context, technological innovations come with emissions, even renewable energy and electric vehicles — and crypto is not an exception.
The estimated footprint of the Internet and ICT sector (Information and Communications Technology) is around 2% of the world’s Greenhouse Gas emissions.
In 2015, nation states and organizations ratified the Paris Climate Agreement, which aims to lessen global warming with a target of temperature change since pre-industrial averages of under 1.5deg Celsius. This can only be achieved if we are carbon-neutral by 2050.
Wall Street investors are now preoccupied with the ESG narrative (Environmental, Social, Governance) to make themselves accountable.
ESG Funds have been sprouting up everywhere and big banks are preferring to lend to green projects, shutting down funding sources for heavy polluters.
The crypto community, while relatively new and having strong anti-establishment tendencies, isn’t all about money. A combination of open-source software culture, the financial innovation of crypto and the principles of sustainability could accelerate action to address the climate crisis.
Crypto X Sustainability Applications
With the invention of blockchains, transparency in accounting is now a reality. The immutable property of storage makes the data open for interpretation later on.
You can bring energy, pollution, and sustainability data on-chain. You can tokenize them and open markets for green assets.
Here are some of the different applications and projects that are disrupting both industries.
We’ve all heard that mining crypto (Proof-of-Work or PoW) is destroying the planet. That’s somewhat true on its own scale if we’re considering crypto purely as a Medium-of-Exchange.
But, there are more efficient forms of mining and other blockchains which utilize a different consensus algorithm.
Proof-of-Stake (PoS) chains are 99% more efficient in terms of energy use than PoW, which Bitcoin will always use and currently the Ethereum network uses as well.
Polygon ($MATIC), Polkadot ($DOT), and Binance Smart Chain (BSC) are some of the largest PoS blockchains.
Using storage devices like hard drives as a validator of transactions (Proof-of-Capacity or PoC) is another more energy-efficient consensus mechanism. Filecoin ($FIL) and Chia ($XCH) are some of the projects using the Proof-of-Time algorithms, which are specific types of Poc.
But what about PoW? this is the algorithm used by the world’s largest blockchains (Bitcoin and Ethereum).
Green mining is another avenue for miners who wants to participate on the crypto economy, while being mindful of its impact on the environment.
To mine crypto on a PoW chain with minimal carbon footprint, the source of energy must be renewables such as hydropower from dams, solar energy from the sun, wind power, geothermal, or (controversially) nuclear energy.
Gryphon Digital Mining is one such project with the vision to “create the leading carbon neutral miner”. A combination of renewable energy generation and carbon offsetting could make their vision of “green mining” a reality.
Onchain Record of Greenhouse gases
This is one of the biggest value adds that crypto can bring to sustainability. Each and every project, both offline and digital, needs verification of emissions, which can then be stored on-chain as a permanent, verifiable public record.
MRV or Measurement, Reporting and Verification is an activity to validate emissions data throughout its lifecycle.
Carbon Credits and Sequestration
The operating principle for sustainability is efficiency first, offset later.
For activities that have emissions that cannot be addressed, Carbon Credits aim to balance them. Carbon credits (or offsets) are products that represent an activity that removes 1 tonne equivalent of CO2 per offset.
KlimaDAO ($KLIMA) is a protocol that aims to fix the carbon markets by bringing carbon credits on-chain and using them as reserve assets in the treasury of the organization. At launch, they onboarded 2 million tonnes of Verra-registered carbon offsets. Combining the 3,3 principles of OlympusDAO and sustainability, the tireless team at KlimaDAO launched on the Polygon mainnet on Monday, October 18th.
Toucan (formerly co2ken) is Klima’s carbon bridging partner. They build the technology to bring carbon on-chain in order to integrate climate finance into products and services, like Klima.
Offsetra is another project that bridges legacy carbon and crypto. They introduced a tool, carbon.fyi that calculates the footprint of your transactions and offers a range of projects to offset your emissions.
Nori is a carbon removal marketplace that lets you offset CO2 using sustainable farming practices and by directly removing carbon. We hear that they will probably be releasing their own token later on to power this registry.
Renewable Energy Generation and Trading
Right now, trading renewable energy for money can only be done by selling back to the grid operators.
With blockchains, you can issue tokens that represent a unit of energy, generated by your community or even your own home, and sell to your peers without intermediaries.
Powerledger ($POWR) is one of the OG green projects in the space. They’re building the p2p exchange for tradeable renewable energy credits (RECs).
Wepower ($WPR) is another platform that connects producers and corporate buyers for trading green energy.
CarbonSwap ($SUSU) is a Decentralized Exchange built on the Energy Web chain.
For artists and collectors that are wary of wasted energy and advocates of #GreenNFT, there are NFT platforms that are both efficient and green.
Kodadot is a carbon-neutral NFT platform built on the Polkadot ecosystem, an energy efficient POS chain. It also offers to offset emissions of each NFT mint on its User Interface. We hear this community-owned marketplace will launch their own chain soon.
Project Ark is a “marketplace for rare digital collectibles, which directly fund animal and environmental conservation efforts around the world”. They’re affiliated with Panda Labs of the World Wildlife Fund (WWF).
Masungi Georeserve is a conservation area that recently finished an NFT drop on BSC to fund its efforts in saving forests in the Philippines.
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Disclaimer: The above post is for informational purposes only, and must not be treated as an investment advice. Please do your own research and manage your risks accordingly.
The author may have been involved in some of the projects mentioned above.
DeFy Trends is a women-founded, all-in-one, intuitive, real-time analytics application and chrome extension that uses on-chain analysis and high tech data science algorithms to provide data insights based on DeFi fundamentals and sentiment. By scraping the web and social media for cryptocurrency sentiment analysis, incorporating real-time market data, qualitative data, and forecasting AI to bring retail and institutional investors state of the art insights on the rapidly growing crypto-decentralized finance markets.