Is Decarbonizing Cryptocurrencies a Long Shot?

This blog was coauthored by Sebastian Foot and Randa Abdelhamid.

On April 8, 2021, global nonprofits Energy Web, the Alliance for Innovative Regulation, and the Rocky Mountain Institute announced the launch of the Crypto Climate Accord, a private sector-led initiative focused on decarbonizing the cryptocurrency industry in record time. Within the first few days of its launch, the accord garnered the support of more than 20 companies and individuals in the crypto, finance, energy, climate, and technology sectors. The current list of supporters of the accord includes big names such as CoinShares, Ripple, and ConsenSys, and this list is expected to get longer. 

Accord Outlines Three Ambitious Objectives

Taking inspiration from the Paris Agreement, the accord brings together the crypto and fintech industries along with support from the United Nations Framework Convention on Climate Change (UNFCCC) Climate Champions to lead sustainability efforts for global finance. The accord’s objectives include:

• Enabling all of the world’s blockchains to be powered by 100% renewables by the 2025 UNFCCC Conference of the Parties
  
• Developing an open-source accounting standard for measuring emissions from the cryptocurrency industry
  
• Achieving net-zero emissions for the entire crypto industry, including all business operations beyond blockchains and elimination of historical emissions, by 2040
  

Critics Question Whether the Initiative Will Succeed

Critics of the accord question whether this initiative can make good on its objectives. They cite the enormous amounts of energy consumed by the most popular cryptocurrencies and the lack of any government backing to this accord as the major obstacles. Critics also acknowledge that addressing the environmental damage caused by the crypto industry is a pressing challenge, but they remain skeptical of the accord’s ability to address this challenge in a meaningful manner.

Supporters of the accord plan to host the inaugural Crypto Climate Accord Congress by the end of 2021, which will report on progress made toward the accord’s objectives. With the increased focus on the environment and climate change under the current administration, the world’s eyes are now on the cryptocurrency industry to do its part and address its carbon footprint challenges.