The crypto industry, with its questionable carbon footprint, now has a convenient way to showcase its green credibility on a verified (rather than trusted) basis.
But this raises a tricky question: Companies like Amazon and Google, whose processing takes place largely in directly owned and controlled data centers, are able to tap clean energy with relative ease and precision. But who do you ask if you want to make Bitcoin greener?
Announced Wednesday, Energy web, a non-profit organization focused on decentralized approaches to network decarbonization, wants to show how a large blockchain platform can move to a zero carbon footprint. For starters, the organization is partnering with San Francisco-based Ripple and the XRP Ledger Foundation.
Ripple’s support for this business is intended to open the door for other blockchains with more power-hungry operations like Bitcoin, said Jesse Morris, Chief Commercial Officer of Energy Web.
To make all of this possible, the association released an open source application called EW zero this allows individuals, businesses or even entire blockchain ecosystems to make the transition easily. This initial rollout uses Energy Attribute Certificates (EACs) from renewable energy sources to decarbonize electricity, the companies said.
Ã ¢ Â ?? Â ?? Blockchains are a huge energy hog and much of that electricity does not come from wind, solar, hydropower or other sustainable facilities. Morris said. We’ve been thinking for some time about how we might help the crypto industry decarbonize blockchains, given the distributed nature of the technology.
First of all, ripple
In the case of Ripple, a 500-person financial technology company focused on crypto-based banking, there’s an obvious place to start when it comes to reducing the company’s carbon footprint. Additionally, Ripple uses a consensus system quite different from Bitcoin’s Proof of Work (PoW) mining, an algorithm that by definition has to burn a ton of electricity. (At last count, the top five PoW blockchains are currently using up to 170 terawatt-hours (TWh) of electricity per year Ã ¢ Â ?? Â ?? Ã ?? Â more than upstate New York.) Ã ?? Â
Presented with these observations, Ken Weber, Head of Social Impact at Ripple, said that in this case, it would be beneficial to put aside the tech-based tribal differences and take more of a “? ? “All of this together? ? ? ? approach.
Ã ¢ Â ?? Â ?? These are the early days for all these currencies, which currently have a tiny share of global finance, but further down the line [green energy adoption] is going to be a lot harder to reverse engineer, Ã ¢ Â ?? Â ?? Weber said. Ã ¢ Â ?? Â ?? We wanted to help facilitate adoption of these practices. It is not a wish of ownership of RippleÃ‚Â ?? s share; it is all a wish of a system. As with other social change movements, the idea is not to make them feel bad or ashamed, but to give them a way to do it that is reasonable, beneficial and participatory.
Alex de Vries, founder of Digiconomist, which identifies trends in cryptocurrencies, said carbon offsetting has passed at the level of crypto exchanges seek to do business with traditional financial institutions that respect environmental, social and corporate governance (ESG) mandates.
Ripple takes advantage of the fact that people associate high power consumption with blockchains, but that’s really just proof of work. said de Vries. Ã ¢ Â ?? Â ?? With Bitcoin, you are talking about an extreme carbon footprint of 300 kilograms per transaction. I didn’t do the math on Ripple, but it’s going to be closer to a Visa transaction, which is 0.4 grams per transaction.
Still, it’s a step in the right direction for a relatively young industry that could become one of the first to be carbon neutral, Energy Web’s Morris said. In the same way that large companies use certificates to decarbonize complex supply chains, blockchain users can purchase certificates from different places around the world (EW Zero also uses a blockchain system to track and account for these certificates) .
Imagine having a wallet interacting with a blockchain in the future, and as part of that wallet you can actually increase your transaction fees a little bit and you just help decarbonize the blockchain by buying a certificate somewhere, Ã ¢ Â ?? Â ?? Morris said. Or if you are a bitcoin miner in a mining pool, you can also use this app to directly buy certificates in a specific part of the world. ??A??
The impetus to give it a go is twofold, said Walter Kok, CEO of Energy Web.
Ã ¢ Â ?? Â ?? Firstly, on the supply side, it will be useful to hook up existing green power producers who are already serving Bitcoin, who may have green power overcapacity, Ã ¢ Â ?? Â ?? Kok said, adding: Ã ?? Â
The other part won’t happen overnight, but at the end of the day everyone wants to be sure that they are making a better world. So let’s get to the point where we can say for sure that all blockchains including Bitcoin and all of its miners are producing in a green way.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.