In a banner year for cryptocurrencies (so far), not all of the news is going to be good.
As Bitcoin and other digital coins have soared in value since January, the toll they are taking on planet Earth has garnered far more attention.
High-profile Bitcoin supporters have come out in force to defend their favourite cryptocurrency. A report published last week – sponsored by Tesla Inc’s Elon Musk, Square Inc’s Jack Dorsey, and ARK’s Cathie Wood, one of Wall Street’s hottest investment pros – depicts Bitcoin as an “ideal” part of renewable energy projects involving solar, wind and battery storage technology.
Meanwhile, a coalition of crypto firms and organisations earlier this month announced the Crypto Climate Accord (CCA), an industry-driven pact in which signatories vow to switch to renewable energy sources to power operations by 2025 and go completely net-zero – eliminating greenhouse gas emissions altogether – by 2040.
But in an age in which previously unrepentant big polluters are suddenly finding a green conscience, questions abound as to whether the accord is a game-changer or simply a greenwash of a growing problem.
Bitcoin mining – in which powerful computer rigs around the world race to verify transactions in the hope of winning new Bitcoins – consumes as much electricity annually as the entire country of Argentina, researchers at the University of Cambridge estimate.
Supporters of the accord say that massive carbon footprint – rather than the growing public outcry over it – is motivating them to roll their sleeves up and get down to business.
We recognise that crypto does use a lot of energy, so let’s make it 100-percent green.
CCA is led by three nonprofit groups: the Rocky Mountain Institute, a sustainability non-profit; the Alliance for Innovative Regulation, which advocates for a fair financial system; and Energy Web Foundation, which focuses on open-source technologies to accelerate the low-carbon transition.
“We recognise that crypto does use a lot of energy, so let’s make it 100-percent green,” Jesse Morris, chief commercial officer at Energy Web, told Al Jazeera.
Rather than “a political handshaking thing,” Morris says the accord is a “tool box for action” that aims to generate a critical mass of crypto firms following a decarbonisation plan.
“If you are a Bitcoin miner building out applications, we want you,” he said.
But critics charge that a self-regulated accord could get in the way of more effective government policies for reining in crypto emissions.
A brake on effective regulation?
The accord has picked up plenty of high-profile supporters ranging from French electric utility Engie and billionaire former US Presidential hopeful Tom Steyer to the entities behind the cryptocurrency XRP, often referred to as “Ripple”.
Monica Long, the general manager of the RippleX payment platform, told Al Jazeera that her company plans to become carbon neutral by 2030, aligning it with other members of the accord.
On that front, Ripple has something of a leg up.
Bitcoin has such a massive carbon footprint because it relies on something known as a proof of work (PoW) consensus to validate transactions and create and distribute new coins. The most competitive “mining rigs” that race to verify transactions for the reward of new Bitcoins are often comprised of thousands of computers labouring in unison and eating up massive amounts of energy.
By contrast, Ripple does not reward mining activities with new coins. Instead, it uses a less energy-intensive consensus protocol to validate account balances and transactions in the system.
Other lesser-known cryptocurrencies use proof of stake (PoS) – also a far less energy-intensive method of verifying transactions because mining power is not determined by how many computers are crunching numbers at once, but by how many coins the…