Bitcoin’s energy consumption is comparable to that of major corporations like American Airlines, which flies over 200 million passengers a year, and even the entire US federal government, which employs 2 million people, according to research on Wby Bank of America.
Each $1 billion in inflows into bitcoin uses the same amount of energy as 1.2 million cars, estimates the report. “Looked at differently, a single Bitcoin purchase at a price of ~$50,000 has a carbon footprint of 270 tons, the equivalent of 60 ICE cars,” Bank of America said in a note published on Wednesday.
Bitcoin’s carbon footprint is directly linked to the price. As the price goes up, so do the resulting emissions, as more crypto miners become involved. In turn, the bitcoin network has to become more complex to cope with the demand and prevent hacking. This then requires more hash power, which drives up energy consumption, the bank said.
“Given the relatively linear relationship between bitcoin prices and bitcoin energy use, it is perhaps no surprise that bitcoin’s estimated energy consumption has grown over 200% in the past two years,” Bank of America said.
Bitcoin uses as much power as a small, developed country like Greece, which has a population of over 10 million people, at a time where most companies and countries are focused on lowering their environmental impact, the bank said.
“Another key concern is that most hash power comes from China, where the government actively encourages bitcoin mining and where electricity costs are very low.
“Nearly 60% of Chinese electrical generation is from coal fired power plants, with less than 20% coming from natural gas or renewables,” Bank of America said. This means most bitcoin mining is fueled by unsustainable fossil fuels.”
Other crypto currencies including Ethereum’s ether token are only slightly less impactful on the environment, the report said. However, the digital currencies proposed by central banks would not have the same negative impact, it added.
Beside the environmental impact, the report also discusses social and governance risks associated with investing in bitcoin, which Bank of America says should not be underestimated.
Democratisation and decentralisation of money have value, “But negatives outweigh. Anonymity aids nefarious activities,” it said.
US Treasury Secretary Janet Yellen has said on numerous occasions one of her concerns around cryptocurrencies is their use in criminal online activity, including money laundering.
Accounting giant Ernst & Young announced Monday plans to become carbon negative in 2021, “net zero” in 2025 and cut its total emissions by 40% with seven key commitments.
The London-headquartered firm achieved its goal of becoming carbon neutral in 2020, but after reviewing the science and talking to the company’s climate change experts, it became clear that being carbon neutral wasn’t enough.
Steve Varley, EY’s chief sustainability officer who was appointed in July 2020, told Insider the company emitted 1.1 million tonnes of carbon dioxide in 2019. The travel restrictions brought on by the coronavirus crisis has meant these emissions have fallen to 769,ooo tonnes, but Varley said EY’s commitment is “regardless” of the impact of the pandemic.
“Our commitment is to remove more carbon dioxide from the atmosphere than we emit every year, forever,” he said.
Varley said he was inspired by Microsoft becoming carbon negative in January 2020. “That’s been on our minds and part of the inspiration for EY also declaring that we become carbon negative.”
“Wouldn’t it be fantastic if society recognized that business is a positive driver rather than a negative contributor” to the environment, he said.
Here are the seven ways in which EY plan to become carbon negative this year.
Cut down on business travel emissions
EY’s first commitment is to reduce travel emissions produced by the business by 35% by 2025. That includes employees or clients travelling by plane, train or bus.
Of the 1.1 million tonnes of carbon emitted by EY in the financial year of 2019, three quarters (76%) of those emissions came from air travel. Since the pandemic struck in March, this amount has reduced as less people are travelling.
While the pandemic won’t last forever, Varley said EY expects employees to continue to use technology such as Zoom to communicate which will ultimately reduce the need to travel. The company is also investing in collaboration technologies to help achieve this goal, he said. Many EY clients have made similar commitments to reduce their carbon emissions, Varley said, who believes there will be teamwork between both parties to make sure they cut down together.
Reduce overall office electricity usage
Another commitment EY has made is lowering the electricity usage in its offices and procuring 100% renewable energy for the remaining needs of the company. This will help EY become a member of the RE100, a group of organizations worldwide committed to renewable electricity, by 2025, the company said.
Given that coronavirus has forced many employees to work from home, this may seem quite easy to reduce. But Varley said the commitment includes calculating how much carbon EY employees, like himself, are emitting from home working.
“The future we see is a mixed economy of working,” said Varley, who said staff and clients have been working in a range of places including home, offices, and client’s sites.
Structure electricity supply contracts
EY also want to sign more contracts with electricity suppliers so any electricity they don’t use can go straight back into the national grid.
Varley said it has a multi year deal with Lightsource BP, a subsidiary of BP, which will provide the accounting firm with renewable electrivity. The deal involves EY buying more electricity than it needs from Lightsource BP, and the electricity it doesn’t use is put back into the national grid for others to use as renewable electricity, Varley said.
Provide employees with tools that calculate how much carbon they’re emitting
In order for employees to take matters into their own hands, EY are providing them with a modelling tool which will work out how much carbon they’re emitting whilst working.
The tool will work similar to another tool that EY uses to calculate the financial budget on a project, according to Varley. It will show you how you can achieve the same result but with a lower footprint, he said.
Plant trees and use technologies to remove carbon from the atmosphere
One of the projects EY has invested in as part of its strategy to cut down on carbon is helping to protect five million trees in the Amazonia rainforest through an organization called South Pole.
EY plans to use more nature-based solutions and carbon-reducing technologies to offset more carbon than it emits every year.
Invest in services to help EY clients decarbonize their company
Varley said EY is accelerating its investment in the company’s Climate Change and Sustainability Service (CCASS) practice, which helps clients and companies identify and understand how to be more sustainable.
The accounting firm is also planning to invest in its tax practice, Varley said, as it’s increasingly likely that many countries will introduce or strengthen carbon taxes.
EY is also part of the “Terra Carta” – a charter unveiled by His Royal Highness The Prince of Wales on January 10, which gives businesses a roadmap to a more sustainable future.
Ensure EY suppliers set science-based targets
EY will require 75% of its suppliers to set science-based targets, which help businesses reduce emissions in line with the Paris Agreement goals, by no later than 2025. Having a science-based target means that companies will reduce their emissions at a quicker pace to make sure they’re not warming the planet up, according to Varley.
“I wouldn’t be surprised that in subsequent years we don’t increase that 75% to 100%,” Varley said. “We realise that we have a role to play systemically because we’re a big global organisation of making sure our supplier also live our values and don’t contribute to the warming of the planet.”
Not enough [companies] have gone carbon negative in their announcement, according to Varley. “There’s an opportunity to get a science-based target, to become net zero and to remove more carbon from the atmosphere than they emit.”