An alliance of large companies aims to reduce the carbon footprint of cryptocurrencies

A group of 20+ companies that include cryptocurrency, finance, technology, energy, and non-governmental organizations have come together to focus on the environmental impact of cryptocurrencies.

In an announcement made today The Crypto Climate Accord (apparently inspired by the Paris Agreement with 195 signatories) aims to address “the large and growing energy consumption of cryptocurrencies and the blockchain and the climate impact of their energy consumption”. Launched by non-profit organizations Energy Web Foundation, Rocky Mountain Institute and Alliance for Innovative Regulation, The group’s partners include top-class companies in the crypto sector such as the blockchain-based payment company Ripple, Canadian mining company Hut 8, the digital asset investment firm CoinShares and the blockchain software company Consensys, etc.

“Industries around the world economies are starting to decarbonise their businesses,” the group said. “We can do the same with cryptocurrencies. We have the opportunity to decarbonize the industry.”

An alliance of large companies aims to reduce the carbon footprint of cryptocurrencies
An alliance of large companies aims to reduce the carbon footprint of cryptocurrencies

The long-term goals of the Crypto Climate Accord include: the transition of all blockchains in the world to the use of 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 crypto industry. The group also aims to have the entire cryptocurrency industry become net zero carbon by 2040. This term refers to a time when man-made carbon emissions can be effectively removed from the atmosphere.

Many cryptocurrency and fintech companies have made public commitments to greener initiatives as the environmental impact of digital assets becomes more apparent. Last year, Ripple announced that it would commit to it Net zero carbon by 2030 Partnered with the Energy Web Foundation and invested in carbon removal technologies.

“The Crypto Climate Accord recognizes that financial technologies, including blockchain and cryptocurrency, are well positioned to lead Global Finance’s commitment to a sustainable future.” Said Ripple in response to today’s launch. “Recent studies suggest that 2023 will be the most critical years for cryptocurrency adoption growth and we know that the longer we wait the more difficult it will be to reverse engineer a systemic trait like sustainability.”

Both Bitcoin (BTC) and blockchain technologies have been lauded for their role in transforming global finance, but also for the underlying technology’s impact on climate change. According to the Digiconomist Bitcoin Energy Consumption Index, the energy requirement for maintaining the Bitcoin network is estimated at around 95.4 TWh per year. an amount comparable to Kazakhstan’s energy consumption. Bitcoin also has an annual carbon footprint (45.34 megatons of carbon dioxide) that rivals that of Hong Kong.

If the goal of the Crypto Climate Accord is to “decarbonise the cryptocurrency industry in record time,” the challenges are akin to those of the signatories to the Paris Agreement, which aims to prevent the planet from registering more than 1.5 degrees Celsius pre-industrial levels. Global carbon emissions are reported to have dropped 6.4% over the past year as many industries were slowed or crippled by the effects of the Covid-19 pandemic. However, that figure is still below the 7.6% cut that the United Nations Environment Program believed was necessary to meet the numbers set in the Paris Agreement.

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