The Crypto Climate Accord Walks a Fine Line Between Self-Interest and the Greater Good
As the spotlight turns once again towards the environmental impact of blockchain technologies, support for the Crypto Climate Accord has come from curious corners of the industry, raising questions about its signatories’ motives.
Authenticity of CCA’s Support Remains Debatable
With concerns surrounding blockchain’s environmental impact garnering a lot of attention, the alarms have grown so loud that crypto mining was the hottest topic of discussion during this year’s UN World Environment Day.
This echoed increased support for initiatives designed to restore the natural ecosystem, proposed by several prominent personalities and environmentally-conscious investors. For instance, this year’s mid-May crypto market crash started when Elon Musk suddenly tweeted that Tesla won’t be accepting Bitcoin as payment due to ‘environmental concerns.’
While blockchain is a powerful and transformative technology that can support real-world cases across a growing range of sectors, its energy footprint is a matter of concern. Blockchains relying on the proof-of-work (PoW) consensus mechanism require high-performance computers, which consume immense amounts of power, leading to inefficiency, non-renewable resource consumption, and significant electronic waste.
To address the carbon footprint of cryptocurrency mining, a newly announced Crypto Climate Accord (CCA) takes on the challenge of transitioning all blockchains to renewable energy by 2030 or sooner and eliminating greenhouse emissions by 2040. Led by private organizations operating within the blockchain and fintech industries, the Accord aims to build a sustainable crypto ecosystem with support from the UN’s Framework Convention on Climate Change.
As of now, the accord has garnered support from some influential names, including crypto company Ripple, blockchain software technology developer Consensys, billionaire climate activist Tom Steyer, and the UN’s ‘climate champions.’
But at this juncture where the planet has been filled with carbon emissions, are billionaires and industry evangelists suddenly regaining a conscience to restore the planet’s ecosystem and act for the greater good? Or is this simply a gimmick designed to suppress criticism and provide good PR?
Self-Promotion Parading as Environmental Activism
`Environmentally conscious’ investors and businesses could finally be waking up to solve the problem at hand, but this also might be more about virtue signaling and trying to appeal to the masses.
The most critical aspect to consider is that CCA is a privately-led initiative with no government backing, leading critics to doubt a self-regulated accord could be as effective as government policies for lowering crypto’s carbon footprint.
Take Ripple’s involvement in the accord and how it benefits from the green crypto initiative. By design, Ripple uses the less energy-intensive proof-of-stake (PoS) consensus protocol, meaning it already has a minimal impact relative to PoW networks. As more and more blockchains are already opting for the PoS consensus protocol over the PoW protocol, it means that over time, crypto’s energy footprint will automatically decline.
Given that nearly all the signatories either already use green energy or are focused on energy efficiency, this Accord feels a bit more like self-serving activism than simply affecting industry change. As such, the Accord’s pronouncements can feel more like a pat on the back than a stern warning to the industry’s main polluters. With no teeth or enforcement, how can this group possibly fight the more significant issue at hand?
Institutional investors, VC firms, and angel investors already realize that PoS-based applications are taking over, and they have already invested billions in forthcoming dApps and protocols. So why are these very organizations the sole supporters of the CCA? Could the support be marketing their competitive advantages and designed to attract more users to their platform through a “greener” appeal?
With the noose already tightening around the PoW protocol due to its impact on the environment, many voices supporting green crypto appear to fall into the conflicted category of self-interest and selfishness. Given the incentives and money at stake within the industry, especially as networks compete for more users and adoption, this latest attempt to self-regulate feels a little insincere.
If money weren’t involved or at stake, the initiative might take on a different look and feel. But given the “winner take all” attitude prevailing in today’s crypto climate, the CCA might just be the edge that organizations feel is necessary to put them on a perceived higher moral plane, despite the genuine environmental concerns the industry must address.