The earth is heating up — that’s a non-negotiable truth.
And one of the best ways to decelerate the approaching environmental catastrophe, based on the UN, is to urgently scale back the quantity of methane emissions. And one of the best ways to urgently scale back methane, funnily sufficient, simply may be bitcoin mining.
Regardless of what you’ll have heard in regards to the dangerous results of bitcoin mining on the surroundings, the cryptocurrency mining trade may truly be a ready-made technique to scale back methane on a big scale.
Sure — in a twist worthy of a John Le Carré novel, what I and different environmentalists have been led to consider was the villain, seems to be the nice man.
It’s my opinion as a local weather tech investor that for those who’re a supervisor of an ESG fund or a member of an ESG funding committee, failure to contemplate Bitcoin within the combine is gross negligence of your ESG obligations.
In a nutshell, Bitcoin affords a monetary incentive to seize methane from landfills. Not solely does Bitcoin mining require the big quantity of power that landfills can provide, this answer may additionally result in up to date infrastructure at landfills that in idea may gain advantage different makes use of of electrical energy.
My evaluation of Bitcoin’s potential environmental affect for good relies on a two-month strong due diligence on bitcoin mining, and it’s solely grown stronger throughout 2023 as I’ve seen new power and environmental purposes.
First, some context. Based on a latest PwC report, there are 23 trillion ESG investments, a lot of which can not deploy into Bitcoin due to the notion that Bitcoin doesn’t tick the ESG field. 9 out of ten asset managers consider integrating ESG into their funding technique will enhance total returns, however demand is outstripping provide of fine ESG propositions.
In latest months, endorsements by KPMG, the Institute of Threat Administration, Bloomberg Intelligence and a peer-reviewed educational research have introduced the highlight on the true affect of Bitcoin as an enabler of renewable transition — and a key power in methane mitigation.
Two years in the past, I used to be listening to very differing views on whether or not Bitcoin was good or unhealthy for the surroundings, each in my function within the environmental motion and from my mates within the Bitcoin neighborhood.
I resolved this discrepancy by doing my very own evaluation. What I discovered stunned me: There have been 41 bitcoin mining firms that have been both solely or nearly solely utilizing renewable power. I discovered that the argument “Bitcoin revives outdated fossil gasoline vegetation” was not supported by Safety Fee filings. As an alternative, these filings clearly confirmed that the one gasoline plant that was claimed to have been revived for bitcoin mining was actually opened to offer extra energy to the grid. It solely began bitcoin mining three years later.
I discovered that the claims “Bitcoin’s main power supply is coal,” “Bitcoin’s emissions are 65 MT CO2e/12 months and rising,” “Bitcoin’s emission depth is growing” and “Bitcoin is struggling to go inexperienced” have been all primarily based upon a single bitcoin mining mannequin from Cambridge College.
Nonetheless, on shut inspection, I realized that this mannequin measured lower than half of hash price, didn’t consider both offgrid mining or flare-gas mitigation, and had not up to date its dataset since January 2022 (when fossil-fuel intensive Kazakhstan represented 13.2% of worldwide hash price, as we speak it’s 0.73%).
As soon as these three exclusions have been factored in, the image modified fully, and all 4 claims from Cambridge have been invalidated: Bitcoin mining was revealed to be primarily powered by hydro, 52.6% sustainable-energy powered, dropping in emission depth markedly, and emitting 34 MT CO2e — a determine which has not elevated during the last four-year cycle.
Now we get to the difficulty of methane discount — methane is 84 occasions extra warming than CO2 over a 20-year interval, and it’s rising at a parabolic price.
How do you make mitigating methane from landfills worthwhile? Nicely, the place potential, one of the best answer is to seize and scrub that landfill gasoline, then ship it to a generator to create electrical energy — which removes nearly 100% of methane emissions. You’re turning air pollution into an asset.
Downside is, many landfills can not promote that electrical energy again to the grid. Both the grid improve prices an excessive amount of, or authorities insurance policies stop it.
Nuno Barbosa, CEO of Landfill Gasoline Carbon Consulting firm Unicarbo, not too long ago mentioned to me that “50% of the world’s landfills haven’t any choice to promote their energy again to the grid, but when that they had an onsite buyer, that will change all the things.”
Who may very well be that person? Landfills are usually not fashionable locations to arrange a enterprise. Moreover, why would anybody make investments tens of millions in energy technology, until electrical energy is most of your operating prices? That is the place bitcoin mining firm’s enormous use of electrical energy — 80% of their working price range and as soon as maligned by environmentalists — proves to be its largest environmental asset.
Except we make methane mitigation worthwhile, the methane mitigation our planet wants received’t occur and our local weather efforts might be in useless. Bitcoin mining is already essentially the most sustainable-energy powered main world trade, and it’s in a novel place to make methane mitigation worthwhile for half of the world’s landfills.
Taking all these info into consideration, my opinion is that Bitcoin is an important ESG asset of our time — and the fiduciary responsibility of each ESG fund supervisor and funding committee to guage.
Daniel Batten is a ClimateTech investor, Bitcoin environmental affect analyst, CEO advisor and writer. He’s most generally identified for his data-driven method to Bitcoin mining analysis.
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