Making Crypto Green with Energy Web Zero
Energy Web is thrilled to be one of the three founding organizations behind the newly announced Crypto Climate Accord (CCA). In the next year, we anticipate dozens of novel approaches coming to market focused on decarbonizing the crypto industry in the spirit of the CCA. But we’ve also developed an open-source application that can play a major role in decarbonizing Crypto: Energy Web Zero (EW Zero).
EW Zero is a public, low-cost application built on top of the open-source Energy Web stack that helps renewable energy buyers drive their carbon footprint to zero via purchases of different renewable energy products, such as impact-rich renewable energy certificates from emerging economies and power-purchase agreements. We can use EW Zero beginning today to help the crypto industry achieve the provisional targets of the CCA by 1) helping crypto holders directly decarbonize crypto holdings while 2) enabling entire crypto networks to decarbonize from the bottom-up.
Demand-side solution: help crypto holders directly decarbonize their crypto holdings
Because of how energy markets are structured, cryptocurrency producers (such as miners) in many places around the world have very little choice in exactly where their power comes from. And even where that choice exists, given the extremely fragmented nature of renewable energy markets and regulatory frameworks with varying degrees of support for renewables, finding the right renewable energy product is a daunting task. EW Zero attacks both of these problems head-on by providing renewable energy buyers with a digital application for locating, procuring, and claiming emissions reductions from verified renewables around the world in a user-friendly, streamlined way.
In the spirit of the CCA, EW Zero can be used by crypto holders to make their crypto holdings green. Whether you are an institutional cryptocurrency investor, a retail crypto hodler, application developer, crypto service provider, or an exchange, EW Zero enables you to purchase renewable energy equal to the non-renewable energy used to create and maintain your cryptocurrency holdings.
This isn’t a new concept: corporates from around the world have been purchasing low-carbon products to help decarbonize supply chains in support of corporate sustainability objectives. In climate-speak, this concept of covering the power consumption from crypto purchases/holdings is analogous to actions to reduce Scope 3 carbon emissions. What’s new here is that we’re using EW Zero to apply these kinds of transactions to decentralized sources of power consumption: blockchains.
Here’s a simple example: you are an institutional cryptocurrency investor who purchased 20,000 BTC. Based on publicly available data, we can estimate the amount of electricity attributable to your 20,000 BTC holdings each year. By extension we can estimate the total carbon footprint of your BTC by making assumptions about how green various grids are around the world (in fact, one of the provisional objectives of the CCA is to develop an industry-wide open source account standard to make this even easier). With that information in hand, you can use EW Zero to search for different renewable energy products around the world. You can then buy enough renewables to make-up for the non-green energy that went into your 20,000 BTC. There are several renewable energy products to choose from: energy attribute certificates (EACs) from existing and future assets, power-purchase agreements, and onsite solar. Energy Web will encourage buyers to support impact-rich EACs, in part because locationality standards are less applicable compared to standard corporate renewables procurement. And once you’ve bought your renewables, you can “claim” the emissions reduction from them since EW Zero makes it easy for buyers to trace the full lifecycle of every megawatt-hour of clean power they bought all the way back to the specific power plant that the energy came from.
This is just one example for an institutional buyer. We can make the same kinds of transactions possible in a more automated way for retail crypto holders via exchanges (think “green crypto” features directly on your favorite exchange) and integrations with wallets.
This is just what we can do with EW Zero today. Our vision is for a whole new category of “negative emissions” products to make their way onto Zero. Here, instead of purchasing renewable energy, cryptocurrency holders invest in different negative emissions projects from around the world to remove and lock away carbon associated with their crypto holdings.
Supply-side solution: enable crypto networks to decarbonize from the bottom-up
Grids around the world are decarbonizing and so are the blockchains underpinning them. However, verifying and credibly measuring the share of crypto production powered by renewables is extremely challenging since most data come from self-reported surveys and proxies (see Vox’s article on this topic) and entities like crypto miners don’t normally get the certificates or bills they need to prove where their renewables come from.
EW Zero and other components of the Energy Web stack address exactly this issue irrespective of the geography or market. Crypto miners and other blockchain actors will be able to automatically track renewables consumption at any given time and report that while preserving privacy. These claims will be, on the other hand, verifiable using a validation mechanism. For example, imagine a miner has onsite solar connected to the grid. This solar, along with the miner, each have unique, self-sovereign digital identities verified by trusted sources like corresponding solar manufacturers and local grid operators. All relevant events, such as estimated power production and excess power sent to the grid, are documented and validated on a highly granular level (e.g., every 30 minutes). That way, this specific miner can provide a verifiable proof of renewably powered, mining-related consumption anywhere in the world.
The last point is key for all industries, not just crypto. Today corporates face significant challenges with reporting their impact in countries without an official tracking system. Energy Web’s open-source tech stack solves this issue. This proposed concept is similar to how Google and Microsoft are working to make their data centers 100% renewably-powered on an hourly basis according to when their data centers actually consume electricity in line with the emerging EnergyTag standard for EACs,
Join the Crypto Climate Accord
We are excited to act on the goals of the CCA and decarbonize blockchains. Interested companies from the energy and crypto sectors can join the CCA by contacting Energy Web directly via doug.miller@energyweb.org.
