The Carbon Bankroll report was created by the Climate Safe Lending Network and The Outdoor Policy Outfit in collaboration with Bank FWD. It was released on May 17. This collaboration allowed us to calculate the carbon emissions from a company’s investments and cash, including cash equivalents, marketable securities, and cash.
According to the report, investments and cash are the largest sources of emissions for large companies like Alphabet and Meta, Microsoft, and Salesforce.
Bitcoin’s proof-of-work (PoW), blockchain network has been the subject of much debate. The network and its participants, particularly miners, have been criticised for their energy consumption. This could be because they contribute to climate change. Recent findings also revealed the carbon impact of traditional investments.
Bitcoin is often denigrated because of “imagery.”
James Vaccaro (executive director of Climate Safe Lending Network) and Paul Moinester (executive director and founder, Outdoor Policy Outfit), drafted the Carbon Bankroll Report. Jamie Beck Alexander, director at Drawdown Labs, spoke out about the report’s impact.
“The role of corporate banking practices in fueling climate crisis has been unclear at best. This important report shines a spotlight. This report’s research and findings offer companies an opportunity to shift the financial system away fossil fuels and deforestation and towards climate solutions. Companies who are serious about climate change will be happy to see this breakthrough and take immediate steps toward using this lever to effect systematic change.
The report highlights a few metrics regarding the climatic impacts of the banking sector, including:
Since 2015’s signing of the Paris Agreement, 60 of the largest investment and commercial banks in the world have invested $4.6 trillion into the fossil fuel industry. The equivalent of 1.968 million tons of carbon dioxide has been funded by the largest US banks and asset managers. The U.S. financial industry would be considered a country if it were to emit carbon dioxide. It is 700 times more than the global operational emissions from financial institutions.
Cointelegraph spoke to Cameron Collins, an analyst at Viridi Funds (a manager of crypto investment funds), about the causes behind the excessive denigration of the Bitcoin network. He stated:
It’s easy to imagine a warehouse full of high-performance computers sucking power down, but it’s difficult to see the downstream effects of cash flowing to finance carbon-intensive activities. This imagery is what most people associate with Bitcoin mining. The entire banking system actually uses more electricity than the Bitcoin mining industry.
There have been many efforts to determine the energy consumed to operate the Bitcoin network. The Cambridge Center for Alternative Finance calculates one of the most accepted metrics for this complex variable, the Cambridge Bitcoin Electricity Consumption Index. (CBECI).
The index estimates that the Bitcoin network’s annualized energy consumption is 117.71 Terawatt-hours (TWh) at the time of writing. To calculate the annual consumption of the network, the CBECI model takes into account various parameters, including network hash rate and miner fees. It also considers mining difficulty, mining equipment efficiency and electricity cost.
The monthly electricity consumption is a sign of the increase in participants and other activity on the Bitcoin network. The monthly electricity consumption has increased 170% from 0.62 TWh to 10.67 TWh between January 2017 and May 2022. Comparatively, carbon emissions for companies like Netflix, Alphabet, and PayPal have increased by 55, 38, and 10 times, respectively.
Collins also spoke about how the perception of Bitcoin (BTC) network could change in the future. Collins said that Bitcoin (BTC), mining could be seen as a financial service and not as mining. This would change the perception of PoW networks, and people might appreciate it as an essential service, rather than a reckless gold rush. He also highlighted the importance of thought leaders within the community in communicating the true nature and benefits of Bitcoin mining to policymakers as well as the general public.
We can all work together to solve the energy crisis
There have been many instances recently of Bitcoin mining communities collaborating with the energy sector — and vice versa — to develop methods that are beneficial to both. Crusoe Energy is an American Energy company that recycles fuel to power Bitcoin mining. Its first operation is in Oman. The country exports 23% its total gas production. It aims to eliminate gas flaring by 2030.
ExxonMobil, the United States’ largest energy company, couldn’t resist getting in on the action. Crusoe Energy and ExxonMobil signed a deal in March to allow Crusoe Energy to extract excess oil from North Dakota wells to power Bitcoin miners. Gas flaring is a traditional method by which energy companies get rid of excess oil from wells.
Similar: Are you stranded? Big Oil could use Bitcoin miners to solve its gas problem
The Bitcoin Mining Council released a January report that showed that Bitcoin mining increased its sustainable energy mix by almost 59% between 2020-2021. The Bitcoin Mining Council, a group that includes 44 Bitcoin mining companies, represents more than half of the network’s total mining power.
Cointelegraph spoke with Bryan Routledge (associate professor of finance at Carnegie Mellon University’s Tepper School of Business) about the comparison of carbon emissions from Bitcoin to traditional banking.
He said, “Bitcoin (blockchain), is a record-keeping tech. Is there another protocol that is as secure, but less energy-intensive than PoW? It is likely that there are many people who are working on this. Similar to regular banks, Bitcoin can be compared to regular bank records for financial transactions.
According to data from Blockchain.com, the block reward for mining Bitcoin blocks currently stands at 6.25 BTC. This is more than $190,000. The average block size is 1,620. This means that the average reward for one transaction could be around $117, which is a fair reward for one transaction.
Routledge added that traditional banks have a much larger impact on the environment than they are. However, for most transactions, the per-transaction cost is much lower — such as an ATM fee. BTC offers many benefits. It is important to become more efficient.
Because Bitcoin’s impact is hard to quantify due to the large amount of change it represents, it is important that we don’t ignore the fact that Bitcoin’s energy consumption isn’t something that can be isolated. Global financial communities often forget that the impact of the current banking system is not balanced by corporate social responsibility or other incentives.
Eileen Wilson –Technology and Energy
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