- 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.
- These are some examples of cryptocurrency companies that are supporting the energy transition.
The global crypto market is projected to reach $4.94 billion by 2030. A critical year for cryptocurrencies, but also for the planet. According to the latest IPCC report, a net-zero carbon global energy transition is urgently required by 2030, one 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 pace of accelerating climate change. And while deliberations are being made on how best to address this challenge, 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 face survival challenges due to receding ice, warmer winters, and changing weather patterns. The Arctic, which is home to four million peopleit is warming about twice as fast as the rest of the world and is threatening the health and livelihoods of about a tenth of Arctic residents, including indigenous groups such as the Inuit, Saami and Chukchi.
Closer to home in the United States, extreme weather events have caused widespread power outages and destructive storms that have crippled large segments of the country’s aging power grid. In fact, Major blackouts have grown by more than 60% between 2015 and 2020.
Debunking false claims
Enter crypto. While not a silver bullet, this multi-functional utility has the potential to help decarbonize unreliable power grids, optimize economic incentives for everyone, not just the privileged few, and be a driver for countries to meet their climate targets faster. However, the immediate challenge in shifting the current debate around cryptocurrency power consumption to a solution-oriented narrative is the amount of misinformation surrounding productivity in this area.
a recent letter sent to the US Environmental Protection Agency (EPA) on April 20 by Rep. Jared Huffman (D-Calif.) and 22 members of Congress is a good example. This letter raised concerns about how bitcoin mining is polluting communities and having an outsized contribution to greenhouse gas emissions. He went on to cite several false claims, namely that “a single Bitcoin transaction could power an average American household for a month…and that Bitcoin annually produces carbon emissions comparable to Greece.” I addressed these unproductive misconceptions in this blog.
This challenge highlights the need for open source, data-driven information that will serve as an industry-wide, verifiable source of truth regarding cryptocurrency energy consumption and, indeed, renewable energy use. Especially pertinent now that the White House Office of Science and Technology Policy is drafting a policy recommendations report to address risks and opportunities related to the crypto mining industry. Expected in August, this policy brief will be one of the first case studies of the impact of crypto mining after US President Biden issued the Executive order on the guarantee of the responsible development of digital assets in March.
Crypto sustainability in action
Crypto miners are unique energy buyers that offer flexible interruptible charging capacity and are location independent. These qualities make cryptocurrencies a strategic utility and a power buyer of last resort that can be turned on or off at any time during a given day anywhere in the world. This helps address the shortcomings of renewables like solar and wind, where the power supply they generate is overabundant or non-existent.
Crypto mining, by design, can put that otherwise unused overabundance into productive use. The net impact of this is the incentive for more solar and wind power to be built, thus phase out the use of fossil fuels faster. This is particularly useful since 66% of the primary energy used to generate electricity is wasted at the time the electricity reaches consumers.
An example of this 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. His 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 most well-known use case is cryptocurrencies, such as bitcoin, which allow the electronic transfer of funds without banking networks. It can be a powerful tool for tracking assets, data, documentation, and transactions, and could be relevant to numerous industries.
Blockchain involves significant tradeoffs regarding efficiency and scalability, as well as numerous risks that are increasingly attracting the attention of policymakers. These include the use of cryptocurrencies in ransomware attacks, fraud and illicit activities, and the energy consumption and environmental footprint of some blockchain networks. Consumer protection is also an important and often overlooked issue with cryptocurrencies. So-called “stable currencies” and decentralized applications operating on blockchain technology pose risks to end users of lost funds and to financial stability in general.
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hive block chain is another example. It is a data center based in Boden, Sweden that draws cheap power from hydropower producers and is now one of the largest active power reserves that the Swedish grid can rely on when there are significant power supply disturbances. home energy. The facility can quickly shut down its machines so power 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 source of money in situations where public power consumption is low and can be turned off during peak hours when public demand for electricity is low. energy is high. As grids move toward incorporating higher levels of intermittent renewable resources, flexible demand It will play a critical role in keeping the electricity grid system stable, reducing carbon emissions from the grid, and increasing the growth of renewable energy.
Over time, the crypto mining sector will mature as it becomes more widely accepted, further empowering this technology to act as a driver for new renewable developments in places previously considered uneconomic. Coupled with continued reductions in clean energy prices, crypto miners will have increased agency to help subsidize more climate initiatives and attract investors concerned with making green and sustainable investments.
The new leaders of the crypto industry are reimagining what impact could look like, taking both a human- and nature-centric design approach to climate sustainability. This space is vast and constantly evolving, but some notable examples worth mentioning include MOSS which is dedicated to the protection of the Amazon rainforest. Blockchain for the climate addresses the implementation of Article 6 of the Paris Climate Agreement with its BITMO platform on the Ethereum blockchain and promotes certificate trading at the state level. OASA is another interesting example that takes the form of a decentralized habitat controlled by an autonomous organization (DAO) for humans and nature. Their mission is to transition from ownership to management, one regenerative town 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 above, that prioritize the health and prosperity of Earth’s biodiversity. . It is no longer just about “focusing on the human being”. The goal of future web3 innovation and design is, and should remain, “focus on the ecosystem”.
According to Ribhu Ranjan Baruah, Project Leader, Biodiversity, World Economic Forum, “In a broader sense, technologies such as digital assets will ultimately be judged on their ability to be human and include nature. This must be done within the contours of an ethical framework that fosters meaningful change by addressing human challenges and accelerating nature-based solutions.”
If the crypto community works collectively with this mindset, its global impact will more strikingly demonstrate, even to its harshest critics, that the crypto industry can be a leader in sustainability and that it is a climate-positive utility company capable of helping achieve a clean energy economy. .
This blog is part of an Agenda series led by the World Economic Forum Crypto Sustainability and Impact Accelerator (CISA) which explores issues at the nexus of policy, sustainability, and social impact to help achieve a systemic, inclusive, and effective approach to governance of distributed ledger technology.