World leaders could force Crypto to take CER seriously

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please review our website policy before making any financial decisions.

At the next United Nations Climate Change Conference (COP) in 2021, world leaders are expected to renew their commitments to meeting environmental goals. If this is taken seriously by lawmakers around the world, will the crypto industry have to step up its game?

Should Cryptocurrencies Consider Their Assessment of Corporate Environmental Responsibility?

Crypto projects should consider meeting corporate environmental responsibility (RCE) standards: a term that refers to a company’s obligation to refrain from damaging the environment.

CER requires companies to reduce environmentally harmful behavior and instead participate and encourage activities that are beneficial to the environment. The idea of ​​CER is that it benefits a company by improving its reputation, making the company a more suitable choice for investors; after all, companies that can stay ahead of regulators won’t have to pay as much as those that don’t to adapt to new rules and regulations.

The Multidisciplinary Digital Publishing Institute (MDPI), which publishes open access scientific journals, highlighted the benefits of CER:

“CER can not only improve the natural environment and create positive externalities for the benefit of companies, but also provide better access to external finance, improving to some extent the financial transparency of companies and reducing the abuse of cash flow. available. “

A number of crypto companies have taken steps to enforce CER. For example, at the end of June, the Gemini crypto exchange bought $ 4 million in carbon credits to offset the environmental impact of its Bitcoin holdings. The exchange also announced that it would aim to offset its entire carbon footprint.

Join our Telegram group and stay up to date with developments in the FinTech space. Crypto may need to go green

In mid-May, Tesla CEO Elon Musk suspended purchases of vehicles using Bitcoin, citing environmental concerns. Days later, for the same reason, the Chinese State Council reported a crackdown on crypto mining. At the time, Chinese authorities claimed that crypto mining, which is an energy-intensive process, was hurting global environmental goals.

Now, as the world apparently strives to take a big step forward at the UN Cop26 climate summit and world leaders become more committed to meeting environmental goals, crypto projects may fail. have no choice but to go green.

John Kerry, climate envoy to Joe Biden, recently said he expected “surprising announcements” from key countries at Cop26, which is set to start in Glasgow by the end of the year. month.

Kerry said:

The measure of success in Glasgow is that we will have the biggest and most significant increase in ambition [on cutting emissions] by more countries than anyone ever imagined. A much larger group of people is intensifying. I know some countries are working hard right now on what they can accomplish.

Kerry acknowledged that while the progress he envisioned was not “signed, sealed and delivered,” he said Cop26 could pave the way for further progress. “There isn’t a wall that falls after Glasgow. That’s the starting line for the rest of the decade, ”Kerry said.

Previously, as part of the 2015 Paris Agreement, 197 countries agreed to keep the global temperature rise at 2 ° C, while “continuing their efforts” to stay below 1.5 ° C. However, pledges failed as temperatures would rise more than 3 ° C above pre-industrial levels.

Some crypto projects are already pushing for greener models

While a number of industries, including automotive and banking, have pledged to become carbon neutral by 2050, some crypto projects have even more ambitious goals.

On April 23, around 40 companies from around the world across the crypto, finance, tech, NGO, and energy industries formed the Crypto Climate Accord. The deal, which features giant industry members such as the World Economic Forum, ConsenSys, Crypto.com, Ripple and FTX, aims to ensure that all blockchains are powered 100% by renewable energy. by 2025.

Additionally, Ripple and Nelnet recently announced a $ 44 million clean energy fund that will help reduce over 1.5 million tonnes of carbon emissions in the United States. The $ 44 million will be invested in one of Nelnet’s solar energy investment funds that will support the transition to a cleaner and more stable energy future.

It should be noted that crypto miners, who are mainly criticized for their use of non-renewable energy, are quickly turning to greener alternatives, such as the news that nuclear microreactors are being developed for this purpose, as well as El Salvador exploits Bitcoin using electricity. of a volcano.

Alex de Vries, a data scientist, claims that using excess energy to mine crypto makes it more sustainable. He said:

“Bitcoin uses a lot of energy, but if it’s energy use that would otherwise be wasted, that’s not much of a problem. And that’s a lot of what are called stranded assets. But in many cases, these assets are fossil fuels. China recently banned Bitcoin mining because these Bitcoin miners were ultimately responsible for reviving coal mines. We see similar examples in the United States and New York, where a gas plant has been revived from Bitcoin mining.

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About the Author

Tim Fries is the co-founder of The Tokenist. He has a BSc in Mechanical Engineering from the University of Michigan and an MBA from the Booth School of Business at the University of Chicago. Tim was a Senior Associate in the investment team of RW Baird’s US Private Equity division and is also a co-founder of Protective Technologies Capital, an investment firm specializing in detection, protection and protection solutions. control.

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