Bitcoin (BTC) has recently become a popular topic of discussion even for those outside the mainstream crypto community, but unfortunately not for better reasons. In particular, the amount of energy required to mine Bitcoin has raised concerns among investors who have viewed Bitcoin as an alternative to diversification.
Bitcoin currently uses around 110 TWh per year, according to the Cambridge Center for Alternative Finance. The Harvard Business Review article also states that this corresponds to 0.55% of global electricity production, which is roughly the same in a small area.
While this is the case, it is important to note that any industry that benefits society is likely to have an impact on the environment. However, with global warming and other environmental concerns on the rise today, it has become extremely important for the crypto sector to know the amount of energy consumed to mine Bitcoin. When this issue is fixed, people in the cryptocurrency community can come up with solutions to combat this problem in the future.
Today’s Green Solution: Zero Carbon Bitcoin Boxes
Influential leaders and cryptocurrency investors like Elon Musk and Michael Sailor continue to tweet about energy consumption issues in Bitcoin to raise awareness of Bitcoin’s future. Musk and Sailor recently announced the creation of the Bitcoin Mining Council, which is made up of several industry leaders who will ultimately ensure sustainable bitcoin mining.
While this is a step in the right direction, this bitcoin mining tip could take years to make a real impact. Jesse Morris, Chief Commercial Officer of Energy Web, a blockchain protocol designed to facilitate application development for the energy sector, told Cointelegraph that while it is encouraging that Musk and Sailor are tweeting about new bitcoin mining advice, action needs to be taken immediately.
Morris explained that Energy Web is currently working directly with a number of bitcoin miners to create a program that uses blockchain technology to discover the Bitcoin network’s carbon footprint in near real time. Morris notes:
“I want the Bitcoin community to move toward a more efficient consensus mechanism, but I don’t think that will happen, so we need to find a solution now to address Proof of Work problems.”
Morris also believes that a short-term solution to launching an environmentally friendly Bitcoin network could be the development of carbon-free ETFs.
While carbon neutral ETFs may sound like a foreign concept, some investment management firms have already taken steps to enforce it. For example, Toronto-based Ninepoint Partners LP is an independent asset manager with nearly $ 6.5 billion in assets under management. Alex Tapscott, Ninepoint’s CEO, Digital Assets, told Cointelegraph that Bitcoin makes up a large portion of the assets the company manages. “Crypto assets are a fast-growing and important asset class for us,” he said.
Ninepoint created the Toronto Stock Exchange-listed Bitcoin Trust in January this year. The Bitcoin Trust was then transferred to an ETF on May 6th. After the news about the Bitcoin ETF Ninepoint, Tapscott explained that the company decided to offset 100% of the fund’s carbon footprint to give interested investors access to Bitcoin:
“By absorbing the value of Bitcoin’s carbon footprint, we are giving investors the opportunity to gain an environmental impact on Bitcoin. We believe this is a unique and important offer that will help convince investors who are not in a hurry to buy bitcoin.
Tapscott said Ninepoint is collaborating on a number of initiatives to protect the company’s green bitcoin ETF. For example, Ninepoint is working with the Crypto Carbon Ratings Institute, a research company that studies the environmental impact of cryptocurrencies, along with CarbonX, a fintech environmental software company.
Lena Claassen, co-founder of the Crypto Carbon Ratings Institute, told Cointelegraph that the company is using its methods and research to calculate a best estimate of the true carbon footprint of the Bitcoin network. The Crypto Carbon Ratings Institute, along with CarbonX, are informing Ninepoint of its ETF stake in the Bitcoin network. CarbonX then uses Zerofootprint technology, which delivers an equal amount of carbon dioxide equivalent or carbon dioxide to counteract pollution.
While Tapscott was unable to provide specific numbers on the fund’s carbon footprint, he explained that this was mainly due to the fact that assets under management fluctuate when new investors come in and the bitcoin price changes. Bitcoin’s energy impact changes based on the hash rate.