The consumption of blockchains such as those of Bitcoin (BTC) and other Proof-of-Work (PoW) cryptocurrencies is a topic that has been in the news frequently in recent weeks. Although the discussion and dissatisfaction with consumption was one of the reasons for the massive crash last week, we are now slowly seeing the positive impact. More and more companies in the crypto world are taking their responsibility, including crypto exchange FTX!
Bitcoin’s energy consumption (BTC)
The CEO of FTX, Sam Bankman-Fried, took the time a few days ago to explain on Twitter how much Bitcoin actually consumes. There are all kinds of wild rumors that it would be large quantities of liters of gasoline to a barrel of oil per bitcoin transaction. Is this correct?
Bankman-Fried, an expert in the blockchain sector, shows a number of calculations that show how much CO2 Bitcoin actually creates. This results in a series of tweets with different calculations. Without going into too much detail, the CEO arrives at the following summary.
In the last line of his tweet, he shows how much it would cost to offset the CO2 produced by the blockchain. He bases this number on Giving What We Can research, which states that 1 ton of CO2 can be offset by about $ 1. His conclusion: with every $1 you send via a PoW blockchain such as Bitcoin or Ethereum (ETH), you can offset the carbon emissions of that transaction with an investment of $0.0026.
In the last tweet in the series, Bankman-Fried asks Elon Musk if his calculations are correct. It was Musk who started this discussion by deciding with Tesla to no longer accept bitcoins as a payment method. This is due to concerns about Bitcoin emissions. Musk does not seem to have responded to this for the time being, unfortunately. It is actually not too bad!
FTX puts words into action
Based on the above conclusion, FTX also immediately puts words into action. The exchange strives to be CO2 neutral and does this by investing. The trading platform is putting “$ 1 million in the world’s most effective carbon offsetting organizations:”
“BTC doesn't have the greatest energy consumption, but we take our impact on the world seriously. To that end: *FTX strives to be carbon neutral*. We will donate $1 million this year to some of the world's most effective carbon offsetting organizations.”
Looking back at its previous calculations, FTX estimates it will need to invest about $150,000 to offset its share of carbon emissions. “Given the uncertainty in the calculations, we will round this (generously) to $1 million,” FTX said on Twitter. The money comes from the FTX Foundation pot.
This is the foundation of FTX that we have seen before. 1% of all transaction costs on FTX end up in this pot and are invested in all kinds of foundations, including now also organizations that are committed to climate change. Read in this article what the FTX Foundation donates to.
Fortunately, we see more and more companies within the crypto sector recognize the impact of the energy consumption of PoW networks with positive steps as a result. FTX sets a good example by actually putting action by word!