Big business alliance aims to reduce crypto’s carbon footprint

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A group of more than 20 companies including crypto, finance, tech, energy and non-government organizations have come together to focus on the environmental impact of cryptocurrency.

In an announcement made today, the Crypto Climate Accord – believed to have been inspired by the Paris Climate Agreement, signed in 1955 – said it aimed to tackle the “large and growing energy consumption of cryptocurrency and blockchain, and the climate impact of their energy consumption “. Launched by nonprofits Energy Web Foundation, the Rocky Mountain Institute and the Alliance for Innovative Regulation, the group’s partners include top crypto companies, such as the payment company based on the blockchain Ripple, Canadian mining company Hut 8, digital asset investment company CoinShares, Ethereum software company Consensys and others.

“Industries across the global economy are starting to decarbonize their operations,” the group said. “We can do the same in crypto. We have the opportunity to decarbonize the industry.”

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Among the long-term goals of the Crypto Climate Accord are the transition of all blockchains in the world to 100% renewable energy through the United Nations Framework Convention on Climate Change in 2025 and the development of an open-source accounting standard. to measure emissions from the cryptocurrency industry. . The group has also set a target for the entire crypto industry to become net zero carbon by 2040 – this term refers to a time when man-made carbon emissions can be effectively eliminated. of the atmosphere.

Many fintech and crypto companies have publicly committed to taking greener initiatives as the environmental impact of digital assets becomes more apparent. Last year, Ripple announced that it would commit to becoming net zero carbon by 2030 by partnering with the Energy Web Foundation and investing in carbon removal technologies.

“The Crypto Climate Agreement recognizes that financial technologies – including blockchain and cryptocurrency – are well positioned to lead global finance’s commitment to a sustainable future,” Ripple said in response to the launch. today. “Recent studies suggest that until 2023 is the most critical years for the growth of crypto adoption and we know that it will be more difficult to ‘reverse engineer’ a systemic feature like sustainability the longer we wait.

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Bitcoin (BTC) and blockchain have both received praise for their role in transforming global finance, but also criticism of the impact of technology on climate change. It is estimated that the energy needed to maintain the Bitcoin network consumes around 95.4 TWh per year, according to data from the Digiconomist’s Bitcoin Energy Consumption Index – an amount comparable to Kazakhstan’s electricity consumption. Bitcoin also has an annual carbon footprint – 45.34 megatons of carbon dioxide – that rivals that of Hong Kong.

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If “decarbonizing the cryptocurrency industry in record time” is the objective of the Crypto Climate Agreement, the challenges it will face will be comparable to those of the signatories of the Paris Agreement, which aims to prevent the Earth to warn at more than 1.5 degrees Celsius above the pre-industrial level period. Reports suggest global carbon dioxide emissions fell 6.4% last year as many industries were slowed or shut down by the impact of the pandemic. However, this was still not the 7.6% reduction that the United Nations Environment Program deemed necessary to reach the numbers set in the Paris Agreement.