The rise of crypto has generated a sizable backlash with regard to how much energy it consumes and the greenhouse gas emissions it causes. Mining of currencies like Bitcoin is often said to produce the same amount of carbon as entire countries like Greece, Sweden, or Argentina. But as a panel of experts at the World Economic Forum in Davos argued on Tuesday, there’s no easy way to gauge that.
The reason, they said, is a lack of measurable, transparent data in the fledgling sector.
“Transparency is critical for us in establishing trust that we are making progress against the goals that we’ve set out,” said DataKind CEO Lauren Woodman. “These technologies do allow us to account for what we are actually expending and what the actual costs are to be transparent about that. And then to start looking at things and say, ‘OK, where can we improve? What are the externalities that we are not accounting for and should be accounting for?’”
Denelle Dixon, CEO and executive director of the Stellar Development Foundation, made a similar point, saying it’s crucial for all involved to understand the scope of their energy expenditures first.
“The baseline and the framework is important to create that notion of transparency and ability for everyone to think about how they can improve things,” she said. “For us, we can make out that the network usage for the year is equivalent to the electricity use from 33.7 homes in the U.S. The important thing is to say, ‘How can we make all of it better?’ Whether that’s through carbon offset or putting these brilliant minds that have figured out this amazing technology to work on figuring out how you can use this technology still and make it more sustainable, I think that’s where we’re seeing the industry move.”
Another viewpoint came from SkyBridge’s Anthony Scaramucci, the famously short-tenured former White House communications director. After saying he’s invested in carbon offsets for his fund’s portfolio in crypto, he also touted its ability to offset the amount of energy that goes into traditional banking.
“Let’s take my 85-year-old mother who’s still driving her carbon-emitting car to the branch of Chase,” he said. “The teller’s taking their carbon-emitting car and they’re cooling off the branch in the summer and they’re heating it in the winter. It’s a massive explosion of carbon. What this is going to provide, if we get this right, is the future where we’re not going to be doing all that. You’re going to be de-layering the economy and having a massive reduction in carbon.”
Another factor, according to several of the panelists, is that many people, including those with regulatory power, believe that all crypto mining involves a massive amount of fossil fuels. They pointed out how Bitcoin’s carbon emissions rose once China, with its heavy use of hydroelectric power, cracked down on mining.
“When China banned Bitcoin mining, part of it moved immediately to America, where it was split between renewables but also natural gas. A lot of it moved to Kazakhstan where it was powered by coal,” said Brett Harrison, president of the crypto exchange FTX. “Instead of an opportunity to be able to actually regulate it appropriately with good policy, make sure that it’s moving in the direction of 100% renewables, and it’s not stealing energy from a grid from places where the local citizens might not be able to afford the energy; it just moves somewhere else.”
Moderator Michael Casey, chief content officer at CoinDesk, also brought up the idea that a crypto institution with lots of funding could set up sustainable mining operations in developing areas. That, in turn, could bring eco-friendly infrastructure to places that barely need it, a notion Woodman said has potential.
“We’ve seen that work with telecommunications infrastructure where nonprofits are going to be there for four or five years, they’re going to be telecom consumers, and we can use them as anchor clients to build out infrastructure and bring services to rural communities,” she said. “There’s certainly the opportunity to do the same with renewable energy and build out those capacities and currently underserved markets.”
Potential solutions like that, the panelists hope, will convince skeptics and naysayers to see the potential in crypto. Hopefully, Harrison said, that would lead to “responsible regulation” that’s ultimately a win-win for all.
“It doesn’t mean letting it all go unregulated,” he said. “It means figuring out how to continue the current positive push towards 100% renewable energy production—a general move toward better consensus mechanisms, things like wrapping Bitcoin on other chains, which is getting more and more popular. I think these are all things that can help trend in the correct direction.”
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