Meeting Crypto’s Environmental Questions Head-On
By Alexander Höptner, CEO at BitMEX
Sustainability is the challenge of our time. Bitcoin – and cryptocurrency in general – is the transformative technology of our time. So it’s only natural that this industry faces tough questions about the environmental impact of the technology that enables our work. And we as industry leaders need to embrace this challenge head-on.
Crypto has not been lacking in creating waves, but its environmental impact is perhaps the issue that has caused the most controversy and consternation, and certainly in the last year. There are a couple of reasons behind this. We think understanding, and acknowledging them, is crucial to galvanizing the industry to respond positively.
First, we should be mindful that the debate about the utility of crypto is still raging, and those who are skeptics of the technology use its environmental impact as an opposing talking point. This criticism is usually ill-founded, verging on outright disingenuous. We work in this industry because we are confident about the fundamental utility of crypto. But not everyone feels this way, so we should engage constructively with those willing to do so in good faith.
Second, a key tenet of Bitcoin (and other cryptos) is decentralization. The fact that no one person, or group of people, controls the Bitcoin protocol is the key to its resilience and utility. This makes Bitcoin indestructible and radically inclusive at the same time. Yet, many of the proposed solutions to Bitcoin’s environmental impact emanate from perceived centralized, or exclusive, groups like Michael Saylor and Elon Musk’s Bitcoin Mining Council. Community members know that if they give power and influence to centralized actors, they could end up regretting it. Just look at the crypto world’s love affair – then breakup – with Elon Musk earlier this year.
That being said, as leaders in the industry, it is up to us to make a strong commitment to invest in a future where crypto is ever more responsible. That’s why BitMEX has recently committed to becoming carbon neutral, starting by offsetting the carbon caused by withdrawals from the platform. This is important because it allows us to mitigate the environmental impact of our current activity while we make more structural, long-lasting plans. We were glad to announce that we’ve invested $100,000 in reforestation, REDD+, and forest management projects around the world to offset carbon consumption not only for our Bitcoin transactions, but also the servers we run to power BitMEX. We’ll continue to be vocal about challenging others in the industry to do the same.
But mitigating the environmental impact of our current activity is only a first step. As an innovative industry, we can and should do more than just offsetting carbon emissions. I see two ways to move forward from here.
First, we need to invest in education about the true environmental impact of Bitcoin and other cryptocurrencies, increasing access to reputable sources of information. Estimates of the size and severity of Bitcoin’s carbon footprint vary widely, but we are in a position to lend our expertise to help settle the debate. As part of our education efforts, we should also broaden people’s understanding of the true utility of Bitcoin and other crypto as revolutionary technologies that will improve lives. The more time we spend communicating about the macro benefits of crypto – economic empowerment, trustless transactions, DeFi, and Web 3.0 – the more people will see the true power of the technology, rather than thinking it’s all about CryptoKitties.
Second, we should work with – and invest in – people and organizations who are committed to using innovation to lower cryptocurrency’s structural environmental impact, but who will do so in a way that respects the fundamental utility of the technology and its highly decentralized nature. We will find our breakthrough by creating incentives for research and development, but also by letting blockchain technology be part of the solution.
Finally, it should be acknowledged that many of these solutions are in very early or theoretical stages. Our industry is still relatively nascent – and certainly when compared to the structures of traditional finance. But as responsible innovators, we need to move quickly, and be held accountable for what we say we will do. There’s a lot at stake here, and we owe it to ourselves, each other, and the coming generations to make progress.
Read more from the report, Digital Assets: Laying ESG Foundations