The Blockchain & Climate Institute (BCI) acknowledges the White House’s position on the importance of additional research into less-energy intensive Distributed Ledger Technology (DLT), offering the proviso that: Research into newer, low-energy versions of DLT must be encouraged to continue, as a priority.
We welcome the recent White House report titled “Climate and Energy Implications of Crypto-Assets in the United States” released on 8 September 2022, and firmly agree that the responsible adoption of certain DLT consensus mechanisms would help drastically reduce the overall power usage currently feeding crypto mining to below 1%. Implementing a change of direction in this regard should be seen as a vital course of action. As BCI has reiterated on a number public occasions over the past couple of years, we must stress, however, the importance of setting the right agenda upfront – one that will ensure that research and development of climate solutions based on blockchain and other emerging technologies does not suffer due to the negative hype surrounding older-generation crypto-assets. The need to sustainably drive new research endeavours in the field of emerging climate technology is of paramount importance.
BCI would like to stress the fact that crypto-assets are entirely distinct from the Blockchain and DLT as a whole. In other words, while crypto-assets may rely on these technologies as the infrastructure to operate, they are not one and the same. The potential application and benefits of blockchain technology should not be confused with the unbridled amount of energy that certain crypto mining processes currently consume. Blockchain and the broader DLT hold huge potential to help overcome climate challenges in that, among other things, they help to improve reporting and transparency around climate solutions.
In fact, energy-efficient DLT use-cases are critical in increasing the range of possible climate solutions we have at our disposal. As a not-for-profit think tank, BCI is committed to supporting Governments, especially those in emerging markets, to find workable solutions and provide policy support needed in these areas, through solid policy and regulatory research, capacity building and technical assistance projects.
A great deal of current blockchains tend to use the Proof-of-Work model, which we refer to as Blockchain 1.0. We have now largely surpassed the need to rely on these older, more energy-intensive models. Proof-of-Stake (PoS), or Blockchain 2.0, which many technologists are now exploring, carries fewer concerns and is more energy-efficient mechanism. It requires less computational effort, meaning that energy use is therefore negligible by comparison.
In fact, the widespread adoption of low-energy consensus mechanisms could accelerate global clean energy transition by:
- Accelerating the decentralization of electricity production and consumption;
- Automating of energy supply networks, for example, through the incorporation of smart meters and smart devices, while facilitating the collection of validated and reliable data;
- A more agile energy trading market, without the need for intermediaries, in which transactions can be settled immediately; and
- Providing a reliable tool to balance the grids.
Leveraging President Biden’s executive order 14067, the British Embassy in Washington DC and British-American Business Association co-organised a public webinar about the responsible development of digital assets for the climate markets earlier this year where BCI shared its expertise with various stakeholders. It is encouraging to note that a number of the more positive themes we explored in these sessions , in fact, also coincide with the main lines of argument in this White House report.
This is a huge milestone for the emerging field in which BCI works and one that we are very pleased to share with our stakeholders and over 160 members around the world.
Furthermore, we are proud to announce the official release of our latest research publication titled “Governing Carbon Markets with Distributed Ledger Technology” by the Cambridge University Press. The is our second book, which serves as a key reference for legislators, regulators, policymakers, and importantly, climate negotiators at the forthcoming COPs as it proposes a way forward for the responsible development of DLT-based solutions for the global carbon market.