During the last major UN climate change conference in 2015, cryptocurrencies were little known outside of a small community of hardcore enthusiasts. 

Bitcoin's price was $375 per coin, and its impact on the wider economy — let alone the state of the environment and climate change — was a topic of far-off speculation. 

Six years later, as nations gather in Glasgow, Scotland, for the 2021 UN Climate Change Conference, crypto's environmental impact is now decidedly a global concern.

Amid tense negotiations over how to get countries in line with the Paris Climate Agreement, which aims to keep global warming below 2 degrees Celsius, many are arguing that reining in crypto's energy use should be added to the laundry list of tasks facing the world.   

Critics routinely point to the fact that bitcoin consumes nearly as much energy as a small European country at more than 100 terawatt-hours annually, according to the Cambridge Bitcoin Electricity Consumption Index. That's nearly as much as Norway, Sweden, and Ukraine respectively.

While bitcoin proponents have stressed that the fiat money system has energy costs as well, the fact that bitcoin still largely serves as a speculative asset more than anything else has made the idea that it has any environmental impact at all a hard pill to swallow for skeptics.  

Pitching a new carbon-intensive technology — however useful its proponents say it will become in the future — has proven a tough sell amid growing concerns over climate change worldwide. 

That's why some in the crypto sector are taking concerns around its energy use to heart. Inspired by the framework of the Paris Climate agreement, the Crypto Climate Accord (CCA) is just one industry effort to spread the message that crypto should rise to the challenge. 

"Part of the premise of the CCA is that crypto should be criticized for its energy use, but from our perspective, that's not unique to crypto," said Doug Miller, business development manager at Energy Web, a decentralized finance company that co-founded the group. "Every sector has that problem, but the crypto sector has the limelight on it, so let's own it and build solutions." 

What do those solutions look like? The CCA, which launched in April and has 180 members, is prioritizing increased transparency and better tracking of energy use as a natural first step.  

"As the old saying goes, you can't mitigate what you haven't measured," said Marc Johnson, a senior associate on the climate intelligence team at RMI, a U.S.-based nonprofit research institute focused on sustainability and another co-founder of the CCA. 

Never Trust, Always Verify

Johnson said RMI is currently working to harmonize carbon accounting practices across different industries. 

"Across the 17 most highly traded physical commodities, there are over 250 carbon accounting standards that people employ, and there's really not a good way for people to derive meaningful insights from one carbon accounting standard and apply them to another," he said. 

That applies to crypto as well. There is currently no industry standard for tracking energy use or carbon emissions, with many companies and organizations choosing to self-report using their own methodologies. 

The Bitcoin Mining Council (BMC), for example, is one group that has started sharing energy use information publicly using a voluntary survey of around a third of all miners, and its quarterly survey released in October said miners currently had a 65.9 percent sustainable power mix.

The group noted that this makes crypto one of the most sustainable industries in the world. 

However, while BMC does explain its methodology in public presentations, the council is still relying on self-reported data. 

Miller argued that the mining industry should strive for more radical transparency by using the same decentralized technology that is the main selling point of many cryptocurrencies.  

"One thing I found a bit ironic is that the Bitcoin Mining Council, despite the mantra of verify, don't trust, they've approached their climate actions and renewable energy sourcing as 'just trust my self-reported surveys,'" he said. "From our perspective, we believe crypto decarbonization should use decentralized technology so that we can deliver proof of truly green crypto." 

"Verify, don't trust" is a variation on the common cybersecurity concept of "never trust, always verify" that calls for full verification of all information no matter where it comes from.

Applying this concept to carbon accounting practice in crypto would be a game changer, according to proponents. 

If you're a mining facility in Texas, for instance, there would be a clear system in place for automatically tracking, measuring, and disclosing your exact energy make-up, which would then be available publicly through a decentralized network. 

"I think we're going to see a big transition in bitcoin and other mining-based blockchains proving where the energy is coming from versus just saying it's 50 percent renewable," said Mathew Yarger, head of smart mobility at the IOTA Foundation, which operates an open-source distributed ledger and cryptocurrency and is also working to push crypto toward sustainability. 

He added that more transparent data tracking around energy use could help prevent greenwashing in crypto, especially as pressure on the industry grows, and eventually open the door to using decentralized technology to help other sectors become more sustainable. 

In part, making this happen means integrating with existing regulatory frameworks, such as renewable energy certificates or RECs, which make up an established market for renewable energy that help certify where energy is actually coming from.

"I absolutely see this overlapping with regulatory frameworks," Yarger said. 

As Miller stressed, miners can't just plug into the Texas grid, look up the sustainable power mix of Texas overall, and say that's their own power mix. They actually have to certify that they purchased the energy from a particular renewable source.

"There is unfortunately a bit of a learning curve on renewable energy markets," he said. "Today these markets are really clunky and they use old technical systems. If you want to buy renewable power today, you pretty much have to hire somebody to buy it on your behalf."

Decentralized technology, he added, could help cut out those middle men and make it much easier for stakeholders in the crypto space to learn the ropes and get started. 

Willing and Able 

One added complication for crypto, however, is that it's changing all the time, making the process of establishing a set of best practices a constantly moving target. 

"Even the early guidance documentation that we're putting together right now for carbon accounting is meant to be a starting point, from which we can continue to work with industry 

stakeholders to add onto it and revise it," said Johnson 

Despite its rapid changes, the sector is perhaps more willing than others to adapt and change, he added. 

"Much to many external parties' surprise, the crypto sector writ large has been very willing and able and engaged in addressing this very crucial topic of energy consumption," Johnson said. 

In part, this pressure to adapt is coming from crypto investors themselves. 

"It does seem like the push for green financials is coming more from the demand side of the crypto market, meaning those who invest and hold crypto," Miller said. 

As sustainability standards like ESG — which accounts for other variables outside of pure financials such as environmental, social, and governance factors — get further implemented across the financial industry, he added, crypto is likely to benefit. 

Others contend that more pressure will soon come from the financiers of miners as well. 

"Automated reporting is going to come in based on the funders because they're going to want to see that level of transparency with the funding they're providing," Yarger said.

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