The crypto industry has suffered a huge reputation blow in recent times, partly because of its perceived negative impact on the planet. For instance, Elon Musk sent Bitcoin into free fall after announcing on Twitter that he would stop taking payments in cryptocurrency due to the environmental damage it is causing.
"We are concerned about the rapidly increasing use of fossil fuels for bitcoin mining and transactions, especially coal, which has the worst emissions by any fuel,” Musk tweeted on 12 May. “Cryptocurrency is a good idea on many levels…but this cannot come at great cost to the environment.”
Furthermore, some governments have banned or placed limitations on the use of cryptocurrencies. China in particular has recently banned crypto trading and mining, for fear that the energy-intensiveness of the mining process would undermine global environmental efforts.
But we believe that there is a real opportunity to flip this negative image on its head, and ensure the sustainability of the crypto industry on its growth trajectory. In fact, our aim to make the crypto industry carbon-neutral is not as far from reality as some may think. El Salvador, the first country to make Bitcoin its legal tender, is a prime example of how crypto can become more carbon-neutral as adoption grows. After passing the new law, the country announced that it would use geothermal energy from its volcanoes to mine the currency.
"Our engineers just informed me that they dug a new well, that will provide approximately 95MW of 100% clean, 0 emissions geothermal energy from our volcanoes". Starting to design a full #Bitcoin mining hub around it," - Bukele
We believe that the problems facing the crypto industry are simply teething issues, and we are excited to be working towards a crypto industry that is not only carbon-neutral but also solves real structural barriers than have kept the industry from thriving; by providing frictionless, instant carbon credit for any coin and its associated transactions in the carbon market.
At Carb0n.fi, we are not only solving structural problems related to the carbon credit market through the use of blockchain technology, but as an extension, we are also solving reputation problems for the crypto industry as a whole:
We know that the market is primed. A large number of companies from Sony Interactive Entertainment to KMPG Québec and Williams Racing are committing funding to sustainability, and some of these companies have committed to becoming carbon-neutral, if not carbon-positive. Companies want to contribute to global efforts in reversing climate change but it is currently not straightforward for them to do so. We aim to provide an attractive and seamless solution to using crypto as collateral to be rewarded with carbon credits and our native token. In turn, this will constitute the back bone of our mobile APP, enabling real-world companies one-tap carbon neutrality.
On a practical level as extracted from the Climate Ledger Initiative, Navigating Blockchain and Climate Action: An Overview (Dec 2018), the risk of fraud can be addressed by blockchain networks as cross-checking instruments - a transaction is run by multiple parties and if most of them consider the transaction to be correct under a consensus mechanism, the transaction is merged into a cryptographic code, built into a block, which are decentralised and can be viewed by all parties involved. Individual sections of the blockchain process are encrypted and hence tamper-proof.
While critics center their claims on bitcoin mining, it is safe to say that mining bitcoin is just one of the use-cases of blockchain. A recent report from the Global Mining Council estimated that over half of all bitcoin mining comes from renewable energy sources. Further implementing sustainable means to source renewable energy for mining will be essential. In essence, it is important to swap the proof-of-work algorithm and other original consensus mechanisms for other algorithms that consume less energy, such as the proof-of-authority, proof-of-stake, and proof-of-elapsed-time. As we assess each of these mechanisms and their potential impacts on the environment and climate, it is also important to consider a restructuring algorithm that rewards and incentivises how blockchain is maintained.
The argument that blockchain, through bitcoin mining, causes environmental degradation and emits CO2 is an underlying decisions by governments of many nations to ban blockchain. In reality, it becomes practically impossible to ban a decentralized and open network like blockchain. Moreover, there are technical and specific explanations that knock this argument off. Some blockchain-based networks now use renewable energy, and the capacity to consume energy that produces value needs to be emphasized. For instance, El Salvador, known as the land of volcanoes, recently planned to develop a volcano-powered bitcoin mining with zero emissions, very cheap 100% renewable energy. This move buries all the debates and criticisms surrounding blockchain's carbon footprint.