ESG Unlocked: Europe out in front - Page 30

Chart 3 : Getting the right mix
Share of Renewable Energy in the Energy Mix by Identified MW
Share of Renewable Energy in the Energy Mix by Mining Farm
26 % 31 %
56 % 60 %
18 % 9 %
Total 1.745n MW
Source : 3rd Global Cryptoasset Benchmarking Study
Total 128 Mining Farms
n Energy mix includes renewables n Energy mix does not include renewables n N / A
“ As a bitcoin miner you do not always have control over your energy mix and your banking on the grid which uses whatever mix . What if a renewable energy company gave you that choice ? “ Chan asked .
Data from the 3rd Global Cryptoasset Benchmarking Study published in 2020 indicates 56 % of the identifiable energy mix for crypto miners was made up of renewable energy sources . In July this year , the Bitcoin Mining Council reported that renewables now make up 60 % of the mix ( see Chart 3 ).
Benchmarking study
Bradford van Voorhees , the founder of the Sustainable Bitcoin Protocol , goes one step further by stating bitcoin PoW mining is , and can be , “ climate positive ”, meaning bitcoin can actually reduce carbon emissions .
For instance , renewable energy firm Crusoe uses methane from garbage landfills across the US to power computers and data centres . In March , Exxon partnered with Denver-based Crusoe to mine bitcoin in North Dakota , with work starting in 2021 .
Other examples include PRTI , who are looking to capitalise on the 300 million car tires discarded to landfills in the US annually as a source to fuel bitcoin mining . “ You could just have a bitcoin miner hook up their portable mining device and use the energy from landfills or other waste products to produce clean energy for their mining operations ,” van Voorhees explained . “ We are in discussion with ETF and ETP issuers . Once we solve how the energy used to mine bitcoin is produced , proof-of-work is the far superior system to proof-of-stake .”
Do not forget the ‘ S ’ in ESG
For Gonzalez , it is clear that the current carbon-offsetting bitcoin ETP solutions are no more than a band-aid and not a long-term strategy . “ Current ETP products are not directly solving the problem of ESG . We believe in sustainable crypto , but a truly sustainable crypto ETP on proof-of-work is just not possible ”, Gonzalez said .
However , Gonzalez noted that critics of bitcoin and crypto energy use tend to only focus on the ‘ E ’ part of ESG . “ The social governance components of ESG are often underestimated . Crypto can solve many of the flaws of centralised and traditional finance ,” he said .
Data from the World Bank suggests that 1.7 billion people are unbanked , with a working paper from the CAREC institution noting that out of the 1.7 billion unbanked citizens , 1.1 billion own a smartphone . Additionally , 79 % of adults in developing countries have access to an Android or Apple mobile device .
For inflation-torn nations such as Venezuela or war-ravished nations like Nigeria , citizens often have to rely on crypto accessed over their smartphones to transfer money or preserve the value of their savings .
Research from Chainalysis suggests the greatest growth for crypto adoption is occurring in less economically developed countries , with 16 out of the top 20 cryptoadopters stemming from outside Europe . In particular , small retail payments in Sub-Saharan Africa were responsible for powering the crypto adoption , accounting for 80 % of crypto payments of less than $ 1,000 , according to Chainalysis .
Crypto is a long-term winning asset class and with responsible regulation coupled with technological renewable energy advancements , there is no doubt that ETP issuers will be able offer crypto products that solve the ‘ E ’, ‘ S ’ and ‘ G ’ components that make up strong ESG .
Stephan Roth is a special reports writer at ETF Stream
30 ESG Unlocked : Europe out in Front October 2022