The Pioneering Companies Challenging Crypto’s Negative ESG Image
- Su Carpenter, Director of Operations at CryptoUK
- 02.10.2023 10:30 am #crypto
Let’s face it, the crypto industry’s image in terms of Environmental, Social, and Governance (ESG) has not been very positive – with concerns over high electricity usage and an unseemly yet ultimately unfair association with financial crime – but the industry has been making major moves to rectify all of this, and with some success.
Considering environmental factors first, bitcoin mining is estimated to be responsible for 0.1% of world greenhouse gas emissions, mainly because bitcoins are mined using energy-hungry computers and data centres powered and cooled by electricity usually generated by gas and coal-fired power plants.
Yet many crypto and blockchain organisations are determined to reverse this trend. A prime example of firms pioneering a new environmental impact-focused approach is Terra Solis, a CryptoUK member.
Their Leviathan cryptocurrency mining facility is one of the largest in Norway – yet the whole facility is powered by 100% green hydro energy.
Along with covering the E of ESG (Environmental, Social and Governance), they also contribute greatly to the S by offering jobs and blockchain education courses to the local community, and donating the heat generated by their powerful mining infrastructure to local businesses.
They do this by literally piping the hot air from their buildings to those of surrounding firms, allowing them to save on their own energy consumption and bills and reallocate resources to drive job creation and growth.
Decarbonising digital assets
Digital-assets-as-a-service platform Zumo, a CryptoUK member, have made award-winning efforts towards climate neutrality, net zero and decarbonising digital assets. Describing themselves as a values-driven business, sustainability has been at the core of what they do since the company was founded.
Their stated mission is to bring the benefits of blockchain to everyone whilst protecting the future of the planet. They believe the digital asset sector has an opportunity to lead the way in the transition to renewable electricity, and are leading by example. Zumo have developed a solution, Oxygen, enabling financial institutions to provide customers with digital assets exposure aligning with ESG principles – quantifying the electricity consumption of digital asset activities and matching it with the procurement of renewable energy certificates (RECs), the standardised instrument for procuring clean power.
They have partnered with environmental charity WasteAid and are a signatory to the UN Global Compact and the SME Climate Commitment, reporting progress annually.
Green blockchain platform
Green blockchain platform
Rubix deserve special mention in this category. A shared, decentralised and secure Web3 and Web5 platform designed to eliminate the limitations and setbacks of traditional blockchain, they are also known as “the first green blockchain platform in the world.”
They host a layer 1 blockchain protocol for peer-to-peer data transfer and transactions with operations in the UK, US, Singapore and India, they use less than 1 kWh per transaction – one of the lowest energy consumptions among all computing networks. They have pioneered a Proof-of-Pledge (PoP) protocol, which is a hybrid of Proof-of-Stake (PoS) and
Proof-of-Work (PoW) which removes complex transactions and uses less energy. It is also worth noting, the annual electricity consumption for mining Ethereum fell more than 99.9% after it switched from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism last year.
Digital carbon credits
The blockchain is also being used to support the development of the carbon credit market, which has emerged as a key solution to compensate for greenhouse gas emissions by directing finance to pro-climate projects globally.
The traditional carbon market has been plagued with issues including a lack of transparency, inefficiency, and fragmentation. However, KlimaDAO is addressing these issues by enabling the efficient and transparent trading of digital carbon credit tokens on the public blockchain. Carbon credits on KlimaDAO’s platform can be bought, sold, and traded like any other digital assets through the transparent, interoperable and open-source carbon market infrastructure that has been developed.
Data for good
Some crypto companies are now making a big difference on the social side of ESG. CryptoUK member Swash, for example, uses tokens to provide an ecosystem of tools and services that enable people, businesses, and developers to unlock the latent value of data by pooling, securely sharing, and monetising its value.
The smart part is their Data for Good service. Data generates value when we surf the web, and Swash users can donate those data profits to whatever causes they believe in via a free browser extension without spending any of their own cash.
Giving back to public service workers
Giving To Services is on a mission to financially support millions of public service workers around the world by enabling access to decentralised finance via a crypto token and rewards platform.
SVS token purchases and rewards generate passive income for both individual and institutional token holders. Users can take their SVS tokens, lock them into rewards baskets and earn daily rewards, 4% of which are shared with eligible public sector workers.
Ukraine shows crypto’s true value
Ukraine shows crypto’s true value
The Ukraine invasion – with millions fleeing their homes and losing everything they owned – proved to be a moment where crypto showed its potential in terms of proving its true value as a force for good to help ordinary people.
Until then it had been dismissed by some as high-concept technology for those who could afford investments, but it soon became clear that it can also be an empowering force for good in an increasingly unstable world.
As the invasion began, people started donating with crypto to help the Ukrainian resistance. So far more than $100 million has been raised via crypto donations to support them. This life-changing and life-saving money got through to those who needed it via the blockchain while the banking financial system was under sustained attack by Russia. Fighting corruption and helping the unbanked
Cryptocurrency is a great way for developing countries to eliminate corruption, because everyone can track any bitcoin transactions in the public ledger when money gets transferred.
In Venezuela, for example, many people have been suffering high inflation and the impact of United States sanctions which affects their banks. Many have reacted by transferring their wages into crypto and then transferring money via the blockchain.
Closer to home, crypto is also democratising finance, providing low barriers to entry and eliminating the need for a broker or a high net worth status because anyone can invest in it. Many have been able to learn about annual percentage rates, borrowing and lending, along with the history and purpose of money, all from their own home.
Also, crucially, many people who do not even have a bank account have been able to use crypto as a store of wealth.
Governance and crime
Crypto has long been unfairly associated with financial crime, notably fraud and ransomware. The reality, however, is that illicit activities are only a very small portion of crypto transactions, with the latest estimate from Chainalysis putting this at 0.24%. In fact, public blockchains are the perfect system to thwart this illicit activity because cryptocurrency transactions are not anonymous and authorities can use the open ledger to track the flow of funds in real time. Industry players such as CryptoUK members Elliptic, TRM Labs, and Merkle Science have developed solutions that monitor blockchains to help investigate and prevent crime.
Regulation is a crucial component in the fight against crypto crime, which is why CryptoUK and the wider global industry has been advocating for greater regulatory clarity while implementing higher standards and sector-led solutions in anticipation of this.
Firms such as Plenitude Consulting, another CryptoUK member, provide advice on regulatory obligations and the design of sound compliance frameworks to crypto firms, delivering training on regulatory expectations, compliance and effective risk management. Force for good
Firms such as Plenitude Consulting, another CryptoUK member, provide advice on regulatory obligations and the design of sound compliance frameworks to crypto firms, delivering training on regulatory expectations, compliance and effective risk management. Force for good
The crypto industry has undoubtedly suffered turbulence in many respects over the past few years – not just in terms of its literal monetary value but also scandals such as FTX – but despite all of this, there remains a clear determination from large numbers of organisations in the industry to be a democratising force for good for our both our societies and our environment.
