ECB official proposes ban on tokens with an ‘excessive ecological footprint’

December 7, 2022 Coin Telegraph

Ban

EU officials previously rejected an outright ban on crypto mining, but the Markets in Crypto Assets bill could require firms to report any potential environmental impact.

Fabio Panetta, an executive board member of the European Central Bank (ECB), proposed banning crypto assets with a significant environmental impact as part of efforts to address risks.

In written remarks for the Insight Summit at the London Business School on Dec. 7, Panetta said harmonizing taxation around crypto between global jurisdictions could address some of the energy and environment costs around mining and validation. He added that tokens “deemed to have an excessive ecological footprint should also be banned,” referring to proof-of-work assets in a citation.

Panetta added crypto markets were often at risk due to their “incredibly high leverage and interconnections,” citing the collapse of the FTX exchange:

“The inadequate governance of crypto firms has magnified these structural flaws. Insufficient transparency and disclosure, the lack of investor protection, and weak accounting systems and risk management were blatantly exposed by the implosion of FTX. Following this event, crypto-assets may move away from centralised to decentralised exchanges, creating new risks owing to the absence of a central governance body.”

Crypto-assets have become the bubble of a generation, says Executive Board member Fabio Panetta at the @LBS's Insight Summit 2022.
Crypto-assets are not money. Many are just a new way of gambling https://t.co/S3YOJcq9QM

1/4 pic.twitter.com/2VmYAtWGja
— European Central Bank (@ecb) December 7, 2022

The ECB official’s calls for additional regulatory oversight in a ‘Wild West’ crypto market followed the European Parliament Committee on Economic and Monetary Affairs approving the Markets in Crypto Assets bill, or MiCA, in October after extensive discussions. The crypto framework awaits final approval following legal and linguistic checks by EU lawmakers, with many expecting the policy to go into effect starting in 2024.

Associating cryptocurrency transactions and mining operations with environmental concerns has often been a rallying point for global policymakers. In the United States, the New York state legislature voted in favor of a two-year moratorium on crypto miners that use energy generated by fossil-fuel power plants. EU officials previously rejected an outright ban on crypto mining, but MiCA could require firms to report any potential environmental impact.

Island nation turns to metaverse to preserve its disappearing heritage

November 16, 2022 Coin Telegraph

Coin Telegraph

The island of Tuvalu said it plans to build a digital version of itself in order to preserve its history as it faces erasure due to climate change.

In the South Pacific, the island nation of Tuvalu decided to turn to Web3 technology in order to make sure its culture and society are preserved in the future.

On Nov. 15 the country’s foreign minister, Simon Kofe, told the COP27 climate summit that it is looking for alternative ways to protect the county’s heritage against rising sea levels brought on by climate change. One of those ways is through recreating itself in the metaverse.

As highlighted by Minister Hon @Simon_Kofe in his speech to leaders at #COP27 we have had to act. As rising sea levels threaten to submerge our home we have made a radical plan for the survival of our nation. Visit https://t.co/AKOS8iul64
Save #Tuvalu. Save the world. pic.twitter.com/P8HMkwz4i7
— Tuvalu Ministry of Foreign Affairs (@Tuvalu_MJCFA) November 15, 2022

In a video broadcast, Kofe said, “As our land disappears we have no choice but to become the world’s first digital nation."

Allegedly up to 40% of the nation’s capital district is underwater at high tide and the entire country is forecast to be underwater by the end of the century.

As Tuvalu builds itself into the metaverse, it will become the first digitized nation in the metaverse. Kofe said the country’s land, ocean and culture are its most precious assets and no matter what happens in the physical world they will be kept safe in the cloud.

“Islands like this one won’t survive rapid temperature increases, rising sea levels and droughts so we will recreate them virtually."

Although Tuvalu could become the first sovereign nation to recreate itself in the metaverse, other countries have already begun their own explorations into the digital frontier.

In 2021, the Caribbean island nation of Barbados opened up an embassy in the Decentraland metaverse and was the first to do so. An indigenious tribe in Australia had also laid out plans for opening an embassy in the metaverse earlier this year.

Other countries have begun offering services in the metaverse. Norway recently opened up a branch of its federal tax offices in the metaverse in order to reach its next generation of users. The United Arab Emirates set up a new headquarters for its Ministry of Economy on virtual land.

Major tech-forward cities such as Seoul in South Korea and Santa Monica in California have also created digital counterparts.

Climate Chain Coalition releases report on blockchain and emerging technologies at COP 27

November 11, 2022 Coin Telegraph

Coin Telegraph

Cointelegraph is a member of the network of organizations committed to using blockchain technology for climate action.

The Climate Chain Coalition (CCC), a network of organizations dedicated to leveraging blockchain technology for effective climate action that includes Cointelegraph as a member, delivered its stock take report on Nov. 11 at the 27th United Nations Climate Change Conference, or COP 27, in Sharm El-Sheikh, Egypt.

Founded five years ago, the coalition has been working on initiatives related to the consumption accounting system and greenhouse gas emissions accounting. Tom Baumann, chair and founder of the Climate Chain Coalition, stated:

“During those years, the coalition has grown from 12 founding organizations to over 360 organizations in 69 countries. The coalition was founded on the ethos of blockchain and emerging technologies as an open distributed network where members self-organize into member-driven initiatives.”

*Climate Chain Coalition members at COP 27 in Egypt.*

The coalition’s mission is to resolve issues and challenges needed to advance transformative digital climate innovations by creating resources to support a shared data and digital infrastructure, supporting networking and capacity building, and partnering between digital and climate communities.

*Cointelegraph editor-in-chief Kristina Lucrezia Cornèr speaking at COP 27 on blockchain’s relevance in fighting climate change.*

Speaking at the panel, Cointelegraph editor-in-chief Kristina Lucrezia Cornèr commented:

“Education is key here, and media responsibility is incredibly high. We consider it our biggest mission to talk not only about what is intrinsic to the blockchain industry but what’s going on beyond. And because it’s out of the box that things are uniting us because this conference is about climate action, and climate is so much more [than] just climate change. It’s about sustainability, and it’s about our future.”

Also participating in the panel, Alexey Shadrin, co-founder and CEO of Evercity — a platform for the management, issuance and monitoring of sustainable finance — highlighted how the coalition’s efforts are supporting organizations with use cases of implementing blockchain technology, as well as guidance to the new projects that are rapidly emerging right now in the markets. “We want to make sure that those projects are not only innovative and cool but also aligned with core UN values and standards that currently exist there and that were developed by many, many experts within the UN process and beyond.”

Even though digital assets have been criticized for their high energy consumption, such an accusation is inaccurate, as there is a distinction between cryptocurrencies and the underlying blockchain platforms that can energy efficient and support climate initiatives.

Report: Vast majority of blockchain energy studies ‘lack scientific rigor’

October 26, 2022 Coin Telegraph

Blockchain

According to researchers, 74% of blockchain energy studies 'do not build upon existing theories.'

According to a new preprint conducted by researchers at the Open Universiteit, University of California Berkley, and Radboud University, the vast majority of literature on blockchain energy use from both academic and everyday sources "lacks the scientific rigor expected from a mature scientific field." The report analyzed 128 scientific and open-source studies related to carbon emissions of blockchains such as Bitcoin.

Researchers then found that an astonishing 34% of studies did not even possess an explicit research design. Meanwhile, 43% of studies did not share data, while 67% did not share source code. Finally, 79% of studies had no discussions about the reliability of external data.

Several notable fallacies across studies were discovered by researchers in their analysis. First off, blockchain energy studies typically cite data and derive their conclusions from the Cambridge Bitcoin Electricity Consumption Index. However, the source explicitly states that it only captures about 32% to 37% of all computing power in the network.

Secondly, the validity of electricity costs used in such studies is called into question. Researchers found that a significant portion of studies had "no clear" assumptions for cost of electricity use in cryptocurrency mining. Furthermore, there is considerable opacity within studies regarding their choice of power usage effectiveness.

Finally, researchers flagged the validity of blockchain carbon emission claims. In several studies, they found that the earlier investigators simply extrapolated carbon emissions data, with no empirical evidence, from 2014 and applied to 2014, from 2019 to 2021, from 2015 to all the way up to 2020, and so on.

The report called for discussions into the reliability of models assessing the environmental impacts of blockchains. The crypto community remains heavily divided when it comes to assessing the carbon footprint of blockchains. Some, such as Miami mayor Francis Suarez, say that 90% of energy from Bitcoin mining comes from dirty energy . Others claim that the network accounts for less than 0.08% of the world's carbon dioxide production.

BIS, UN, Hong Kong Monetary Authority concludes tokenized green bonds trial

October 25, 2022 Coin Telegraph

BIS

Project Genesis 2.0 continued the joint effort of exploring blockchain opportunities for green investments.

The Bank for International Settlements (BIS), the Hong Kong Monetary Authority and the United Nations Climate Change Global Innovation Hub presented the results of their “Genesis 2.0” initiative. The project aims to explore the use of blockchain, smart contracts and the internet of things (IoT) for a global environment cause.

The project resulted in two prototypes of tokenized green bonds, developed by two separate international teams, which are “de facto verified carbon credits” recognized by either international, national or other verification mechanisms.

As specified in the press release from Oct. 24, both prototypes of “green bonds” are developed using blockchain and smart contracts, which ensure the tracking of mitigation outcome interests (MOIs). MOI is an essential concept in the language of environment-conscious economic efforts. It allows issuers to borrow against the delivery of the carbon credits upfront and thus to fund their green economy projects in advance.

The first prototype, developed by Goldman Sachs, Allinfra and Digital Asset, showcased an ability to achieve smart contract-based delivery of bonds and MOIs, and provided source data transparency enabled by IoT technology.

The second prototype, developed by InterOpera in collaboration with Krungthai Bank, Samwoo and Sungshin Cement, was built on an interoperable host chain. With a combination of blockchain, smart contract and application programming interface (API) technologies, it also digitally tracked, delivered and transferred MOIs throughout the full green bond life cycle.

Project Genesis 2.0 came as an extension of Project Genesis 1.0, conducted by the BIS and Hong Kong Monetary Authority in 2021. Back then, other private consortia tested the possibility of tokenization of retail green bonds using both a public blockchain and a permissioned blockchain. Project Genesis 2.0 sought to address issues of greenwashing and the additionality of green bonds.

BIS remains one of the most proactive explorers of the digital economy among multinational institutions. In September, it finished a multi-jurisdictional central bank digital currency (CBDC) pilot after a month-long test phase that facilitated $22 million worth of real-value cross-border transactions.

Europe moves toward regulatory action on crypto’s environmental impact, energy use

October 18, 2022 Coin Telegraph

Coin Telegraph

After rejecting a proposal to ban crypto mining, the EU is looking at disclosure and mitigation measures to make crypto assets more sustainable in the coming years.

The European Union (EU) released a package of documents Oct. 18 relating to an action plan for implementing the European Green Deal and the REPowerEU Plan, both of which are aimed at energy savings by digitalizing the energy sector. The European energy planners have cryptocurrency in their sights along with myriad other energy users.

The REPowerEU Plan was announced in May as a response to the Russian invasion of Ukraine, which has had a profound impact on European energy supplies. The Russian crisis was an opportunity for “fast forwarding the clean transition,” the European Commission said. “Controlling the energy consumption of the ICT sector” is a major part of the plan and includes blockchains among the objects of its attention as a subset of data centers.

Green Deal: the light at the end of the crisis tunnel https://t.co/CAd5uorW9y
The faster we deploy the European Green Deal, the quicker we become crisis-proof. Brussels must resist the siren calls for inertia. pic.twitter.com/Z71niRzX8H
— Social Europe (@socialeurope) October 17, 2022

The “Commission Staff Working Document” notes that Europe accounts for about 10% of world crypto mining, with Germany and Ireland leading the continent and Sweden experiencing a large uptick in activity after mining was banned in China. The document foresees the European Securities and Markets Authority drafting technical standards for the crypto mining industry.

The authors of the document cited an undated document written by the European Blockchain Observatory and Forum (EUBOF) think tank, which included “potential policy options that could be warranted to mitigate adverse impacts on the climate of technologies used in the crypto-asset market.” That document will be critical to a report to come in 2025 on the environmental impact of crypto assets. If steps are taken on EUBOF recommendations, they noted:

“This would be a first attempt worldwide to decrease the attractiveness of bitcoin investments and curb the price of bitcoin.”

The paper also stated that investors need better information about the energy use of cryptocurrencies and, echoing the EUBOF document, that the EU should take the lead in creating international blockchain label standards.

The “Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions” said energy use for crypto mining has doubled in the last two years. It noted that proposed Markets in Crypto Assets (MiCA) legislation would require crypto-asset market actors to make environmental disclosures.

In the meantime, due to the tight energy situation this winter due to upheavals in Russian energy supplies, the European Commission, the executive branch of the EU, is urging member states “to implement targeted and proportionate measures to lower the electricity consumption of crypto-asset miners [… and] also in a longer term perspective, to put an end to tax breaks and other fiscal measures benefitting crypto-miners.” Norway is already considering eliminating crypto miners’ tax breaks.

Speaking in Washington recently, Commissioner for Financial Stability, Financial Services and the Capital Markets Union Mairead McGuinness said that Europe placed high importance on the energy and environmental issues connected with crypto. The United States’ Biden administration has also looked at crypto’s environmental impact.

Researchers allege Bitcoin’s climate impact closer to ‘digital crude’ than gold

September 30, 2022 Coin Telegraph

beef

Bitcoin mining raises a “set of red flags for any consideration as a sustainable sector,” according to researchers.

The Bitcoin (BTC) bashing has continued unabated even in the depths of a bear market with more research questioning its energy usage and impact on the environment.

The latest paper by researchers at the department of economics at the University of New Mexico, published on Sept. 29, alleges that from a climate-damage perspective, Bitcoin operates more like “digital crude” than “digital gold.”

The research attempts to estimate the energy-related climate damage caused by proof-of-work Bitcoin mining and make comparisons to other industries. It alleges that between 2016 and 2021, on average each $1 in BTC market value created was responsible for $0.35 in global “climate damages,” adding:

“Which as a share of market value is in the range between beef production and crude oil burned as gasoline, and an order-of-magnitude higher than wind and solar power.”

The researchers conclude that the findings represent “a set of red flags for any consideration as a sustainable sector,” adding that it is very unlikely that the Bitcoin network will become sustainable by switching to proof-of-stake.

“If the industry doesn’t shift its production path away from POW, or move towards POS, then this class of digitally scarce goods may need to be regulated, and delay will likely lead to increasing global climate damages.”

Recently, Lachlan Feeney, the founder, and CEO of Australian-based blockchain development agency Labrys told Cointelegraph after the Merge that “the pressure is on” Bitcoin to justify the PoW system over the long term.

There are always counter comparisons and arguments, however. The University of Cambridge currently reports that the Bitcoin network currently consumes 94 terawatt hours (TWh) per year. To put this into context, all of the refrigerators in the United States alone consume more than the entire BTC network at 104 TWh per year.

Furthermore, transmission and distribution electricity losses in the U.S. alone are 206 TWh per year which could power the Bitcoin network 2.2 times over. Cambridge also reports that the Bitcoin network power demand has decreased by 28% since mid-June. This is likely due to miner capitulations during the bear market and more efficient mining hardware being adopted.

There is also the argument that more mining is now carried out with renewable energy, especially in the U.S. which has seen an influx of mining firms since China’s ban.

Earlier this month, former MicroStrategy CEO Michael Saylor slammed ‘misinformation and propaganda’ regarding the energy usage of the Bitcoin network. He pointed out that metrics show almost 60% of energy for BTC mining comes from sustainable sources and energy efficiency improved by 46% year on year.

Texas, which has become a mining mecca in recent years, is one example where renewables reign — it is the largest producer of wind power in the United States. Several mining operations have also been set up to use excess or otherwise wasted energy such as gas flaring. In August, Cointelegraph also reported that sustainable energy usage for BTC mining has grown nearly 60% in a year so it is not all doom and gloom.

Research Finds Bitcoin Mining Equates to 0.10% of Global Greenhouse Gas Emissions

September 27, 2022 Bitcoin.com

Michael Saylor Publishes Open Letter Discussing the ‘Sheer Volume of Misinformation’ Tied to Bitcoin

September 15, 2022 Bitcoin.com

Environmental groups want Bitcoin to follow Ethereum’s example in moving to proof-of-stake

September 15, 2022 Coin Telegraph

Business

Critics have suggested Bitcoin could not operate as the same decentralized currency without a consensus mechanism like proof-of-work.

Transitioning the Ethereum blockchain from proof-of-work to proof-of-stake has reduced its energy usage by more than 99% — and many climate activists have called for Bitcoin to follow suit.

In a Thursday notice following the Merge, the United States-based Environmental Working Group, or EWG, announced it would be starting a $1-million campaign aimed at urging Bitcoin (BTC) to go green as opposed to using an “outdated protocol” like PoW. The announcement came amid environmental activity group Greenpeace launching a petition directly at Fidelity Investments to facilitate the transition to PoS.

“Other cryptocurrency protocols have operated on efficient consensus mechanisms for years,” said Michael Brune, director of the EWG campaign. “Bitcoin has become the outlier, defiantly refusing to accept its climate responsibility.”

Climate groups to bitcoin: Cut the pollution, and the B.S. https://t.co/qExsfJfDLd
— EWG (@ewg) September 15, 2022

Speaking to Cointelegraph, EWG senior vice president of government affairs Scott Faber suggested the Merge event was generally “good for the climate” in reducing the energy requirements for the Ethereum blockchain. He cited a September report from the White House Office of Science and Technology Policy that concluded that cryptocurrencies — specifically noting PoW staking — significantly contributed to energy usage and greenhouse gas emissions, using more power in the United States than that for home computers.

“The Merge proves that changing the code is possible,” said Faber. “The Merge proves that digital assets that rely on proof-of-work can change to proof-of-stake and use far less electricity [...] We’re hopeful that the Bitcoin community will follow Ethereum’s lead.”

Faber added that he would support any efforts by the White House to set energy standards affecting crypto miners, saying regulators “should not stand by and hope for the best” but needed to take action “quickly” given the climate crisis:

“We’re agnostic. We support cryptocurrency. We’re not opposed to digital assets, but we are concerned about the rising electricity use associated with assets that rely on proof-of-work, and the climate pollution that is inevitably the result of more and more electricity use.”

Some industry leaders have pushed back against moving the Bitcoin blockchain to PoS, citing reasons like security, the impact on the network’s decentralization and how coins would be treated by U.S. regulators. In a Wednesday blog post, MicroStrategy co-founder Michael Saylor claimed PoW was the “only proven technique for creating a digital commodity” like Bitcoin and suggested the total global energy usage of the cryptocurrency was a “rounding error” that was “neither the problem nor the solution” to solving the climate crisis.

“Regulators and legal experts have noted on many occasions that Proof-of-Stake networks are likely securities, not commodities, and we can expect them to be treated as such over time,” said Saylor. “PoS Crypto Securities may be appropriate for certain applications, but they are not suitable to serve as global, open, fair money or a global open settlement network. Therefore, it makes no sense to compare Proof of Stake networks to Bitcoin.”

Bitcoin mining platform Sazmining CEO William Szamosszegi told Cointelegraph in May:

“The fundamental mistake that [...] critics of Bitcoin’s energy consumption make is that they judge Bitcoin by its ‘ingredients,’ rather than its value proposition [...] We ought to judge a novel invention by the degree to which it solves a problem in society. PoW enables sound money and a decentralized currency backed by real-world energy. PoS can not possibly achieve this.”

Many U.S. lawmakers have targeted major Bitcoin miners, with members of the House Energy and Commerce Committee requesting in August that mining firms provide information including the energy consumption of their facilities, energy sources and what percentage came from renewables. At the state level, New York has proposed imposing a two-year moratorium on PoW mining, legislation that would also prohibit the renewal of licenses to existing companies unless they were operating on 100% renewable energy.

Environment

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