Bitso, a Mexico City-based crypto exchange, pledges to buy carbon offsets for every bitcoin transaction on its platform to offset the cryptocurrency’s environmental impact. It might sound great in theory, but the idea also deserves a fair dose of skepticism, given the sketchy reputation carbon offsetting efforts have earned over the years.
Bitcoin’s thirst for power has multiplied, recently surpassing the electricity consumption of several countries, including Denmark and Chile, according to Cambridge University estimates. Most of that energy (61%, according to Cambridge) comes from burning fossil fuels, and unfortunately Bitso can’t do anything to stop the resulting emissions from entering Earth’s atmosphere.
Well, for example, it could ban energy-intensive tokens altogether. But that won’t happen. Instead, Bitso has partnered with Moss.Earth, a São Paulo, Brazil-based carbon offset company, to indirectly reduce the emissions associated with trading bitcoin and Ethereum-based tokens through its platform. The exchange plans to do this by purchasing tokenized “credits from conservation projects in the Amazon rainforest in Brazil.”
In other words, Bitso will eat up the costs by buying MCO2 tokens minted by Moss. In turn, Moss will use the money in part to fund projects that protect forests and fund sustainable agriculture. The company is certified by groups such as Vera, a nonprofit organization that sets standards for carbon credits. However, last year a Guardian and Unearthed study found that Vera’s methodologies were “not robust enough at the moment” – Vera strongly criticized the report.
For the number freaks: Bitso estimates that every bitcoin transaction on its platform “generates 29.4 kg of CO2”2 emissions, equivalent to 0.0294 MCO2 tokens, which Bitso will purchase at market price,” a spokesperson told MovieUpdates. There are a wide variety of estimates that attempt to pinpoint the exact emissions associated with a single bitcoin transaction, and some are much larger than those of Moss and Bitsobut that is beyond the scope of this story. As for MCO2, it is an ERC20 token and has its own associated emissions, but Ethereum is more efficient than bitcoin and the platform is also working on a less thirsty proof-of-stake system. Relief!
With over 4 million users, Bitso calls itself the most popular and largest platform of its kind in Latin America. But globally, CoinMarketCap placed Bitso in 67th place on the list of top exchanges at the time of publishing this story, reflecting the limited scope of the deal.
Moss wants more. “We hope other projects in space will follow suit to offset their carbon footprint,” Moss CEO Luis Felipe Adaime said in a statement.
So, will it work? While the carbon credit industry is huge and expected to grow in size in the coming years, such efforts have been criticized for failing to live up to their perceived potential. For example, Greenpeace writes that “carbon offsetting plans are essentially PR plans,” arguing that companies “should prevent carbon emissions from being released into the atmosphere in the first place.”
Lena Klaaßen, a Zurich-based PhD researcher in climate finance and policy, told MovieUpdates via email that it is “generally possible to offset emissions from cryptocurrency-related activities,” but she cautioned that “Transparency about the calculation method, data quality and offset selection are key to evaluating the quality of such a project.”
For its part, Bitso calls this a “first step towards a larger sustainability strategy to address the environmental impacts of the crypto industry.” Moss predicts the deal will “save about 342,000 trees in the Amazon, offsetting about 5,283 tons of carbon dioxide.” In all, Moss says it has helped save “about 152 million trees in the Amazon through internationally certified and audited projects” since March 2020. work through his site. Still, trust in Moss requires some trust in Vera and in carbon credits in general. And again, when it comes to carbon credits, there is a lot of skepticism.
Saving and planting trees are both hugely popular ideas, but many environmental and advocacy groups have criticized the tree fixation by politicians and corporations, in part because they say there simply isn’t enough room for all the saplings we need to grow the trees. reduce rising emissions from fuel harvesting and burning.
Anyway, happy Earth Day!