How to solve the Bitcoin carbon problem
Cryptocurrency has a carbon problem. As interest from retail and institutional investors continues to rise, a parallel narrative has emerged about the huge amount of energy needed to mine digital currencies: Every day, Bitcoin mining consumes enough electricity to power twelve million homes. The path of Bitcoin’s carbon footprint is decidedly “up and to the right”, as the mathematical grunt work, and therefore energy, required to mine a Bitcoin will only increase over time. Add carbon emissions from other cryptocurrencies and the need to make crypto mining greener becomes dauntingly clear.
Bitcoin’s colossal energy use creates a quandary for the asset managers, corporates and banks that are looking to own it and trade it. With ESG priorities rightfully coming to the fore, these same institutions have made major commitments to fund and invest in greener, lower-carbon ventures. But they cannot meet their crypto and ESG goals simultaneously.
Investors need a way to “green” their cryptocurrency investments, crypto miners need an incentive to use renewable energy, and neither of these currently exists. Today, the only motivation for miners to use renewable power is price, and renewable power is only less expensive than fossil fuels in some seasons and in some geographies (for example, coal-fired power is often cheaper in China, where 70% of Bitcoin mining takes place). There is also no mechanism for investors to choose to buy Bitcoins mined with clean power.
Enter the ViridianZero token. Our tokens will give the renewable crypto mining industry a financial incentive to become dominant. Viridian tokens will also give ESG-focused investors the ability to prove that their crypto investments are green.
Viridian will use public and private information to audit cryptocurrency miners on their carbon emissions. It will then reward those who use clean energy with ViridianZero tokens. For example, if a miner produces four bitcoins per day, and 75% of its computing is run on renewable energy, it will receive three tokens per day. Viridian’s methodology and token issuance will be cross-checked by third-party validation and verification companies.
The advantage for miners is that they can monetize their positive climate actions by selling ViridianZero tokens to investors who want to prove their Bitcoin holdings are clean. The result will be a fundamental shift in incentives for miners, who will opt to generate cryptocurrencies with clean power to increase their margins. Recognizing and rewarding clean mining also allows Bitcoin to help decarbonize the electricity supply by allowing renewable-heavy grids or stranded renewable power sources to mine Bitcoin with spare capacity.
For investors, Viridian’s tokens can transform crypto investments from being an increasingly awkward part of their portfolios to a real catalyst for change. Why could investors (or corporates, for that matter) not simply buy carbon offsets instead? The carbon offset market has been plagued by greenwashing, with payments funding projects that either would have been pursued anyway, or that do not prevent carbon emissions as significantly or as permanently as they claim to. ViridianZero tokens represent CO2 that was definitively never released into the atmosphere. Also, unlike traditional carbon offsets, as RegA+ security tokens they can be bought and sold by anybody, so investors can monetize their holdings if they sell all or part of their crypto holdings. As mining complexity increases, the price of ViridianZero tokens should rise.
Bitcoin and ESG enthusiasts therefore need not remain silent about the contradictory nature of these mega-trends. Viridian’s tokens offer a voluntary solution to the problem. The market for the tokens will reveal the value of cryptocurrencies mined with clean energy and give market participants an opportunity to capitalize on this value. This type of behavioral change can help drive a successful blockchain economy in a way that can meet the world’s essential climate goals.
*Patent Pending
Questions? Email info@zero-carbon.io
