A lot was discussed at the World Economic
Forum
in Davos last month — where the who’s who of government, business and civil
society convened to discuss collective solutions for the multiple crises facing
the planet.
What went a bit unnoticed was the presence of blockchain companies making space
for themselves on the promenade outside the Forum center. After a year of
catastrophic
crashes,
the crypto and blockchain sector was in Davos to prove it should still have a
seat at the table — keen to gain the ear of the prestigious global body that’s
recently acknowledged the future
importance
of blockchain and crypto.
One such voice at Davos was the recently
announced
Blockchain x Climate Leadership Network (BxC) — an
activist-to-industry coalition of international stakeholders collaborating to
define and create principles for meaningful blockchain initiatives to address
the climate crisis. The Network has high ambitions: Become the world’s go-to hub
for all climate-related blockchain efforts. Instead of reinventing the wheel,
BxC will act as a superstructure supporting existing coalitions and working
groups in the blockchain space to build use cases for blockchain-climate
projects.
The partnership was founded by the Solana Foundation and
Ripple in the crypto space, with carbon-offset marketplace Regen Network and solutions accelerator
Climate Collective as supporting partners. The
Global Blockchain Business Council (GBBC), BxCi
(formerly the Blockchain Infrastructure Carbon Offset Working
Group), and Eqo Networks — parent company of the
Ocean Plastics Leadership Network
(OPLN)
— will lead BxC.
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BxC is modeled after Eqo Networks’ industry-to-activist networking strategy,
which serves as the backbone for both BxC and OPLN.
BxC was conceived in Greenland in 2022. After the inception, BxCi convened a
group of stakeholders representing major crypto and environmental organizations
in Colombia. They created several working groups to develop best practices
for crypto engagement in carbon market registries, standards, transparency,
policy, regenerative
finance
and emergent markets. These working groups formed the backbone of BxC.
“BxC is designing and supporting a range of blockchain and climate-related
working groups with the intention of driving tangible, on-chain innovations that
address core needs across web2 and
web3 actors,” said Chris
Krohn, co-founder and Executive
Director of BxC.
BxC-convened working groups explore climate-related use cases for blockchain
technology
and unite separate groups to address the climate crisis, with the end goal of
connecting web3 technologists and Fortune 500 companies.
Working groups cover a range of topics — including decentralized accountability
frameworks, NGO capacity-building, forward contracts, web3 carbon accounting and
climate data. Additionally, BxC is investing in industry labs focused on
ecosystem services, markets, ESG reporting, supply chain, and scope 3
transparency.
“These groups go well beyond discussion and broad exploration, and are instead
designed to foster tangible developments, testing, and large-scale industry
pilots with real-world applications,” Krohn says.
Proof of work vs proof of stake: A tale of two codes
“Proof of work, which is how Bitcoin operates, relies on really massive
computers that basically compete with other massive computers to solve
algorithms to produce Bitcoin,” said Dave
Ford, founder of OPLN and co-founder
and Board Director at BxC.
Assets created on blockchain (such as cryptocurrency) rely on consensus
mechanisms to prove the unit has value. For proof of work-minted crypto, this
consensus currently comes at the price of a disproportionately high carbon
footprint that only benefits a select few.
Blockchain has an image problem due to its association with cryptocurrency —
much of which famously and catastrophically
collapsed throughout 2022.
Crypto
mining
is responsible for about 0.3
percent
of global greenhouse gas emissions, largely resulting from fossil-powered energy
and the resurrection of fossil fuel
assets
to power the sector. The Ethereum platform recently
switched
to a less energy-intensive consensus mechanism.
Greenpeace
is now pushing Bitcoin to “Change the code,
not the climate” and switch to a less energy-intensive consensus mechanism
called proof of
stake.
Proof of stake doesn't rely on competitive supercomputers and dirty energy but
decentralized and distributed computing that’s less energy-intensive than proof
of work. BxC’s current and most pressing dilemma is distinguishing between these
two fundamental blockchain mechanisms and championing proof of stake as a
potential climate boon.
“The biggest macro challenge with anything blockchain related is overcoming
these negative crypto
narratives,”
Ford said. “You have this general misunderstanding that anything crypto and
therefore, blockchain, is bad for the environment; and that just isn't true.”
Cryptocurrency aside, there’s a myriad of possible cleantech-related
applications for blockchain — applications that BxC is convinced will
fundamentally shift supply chain and carbon emissions reporting.
Proof of stake as a climate solution
Ford believes proof of stake will enable blockchain to move beyond its most
pernicious environmental impact and become a driver for pro-climate solutions.
He also believes that all of environmental, social and governance (ESG) metrics
will live on web3 technology in the next
5-10 years because blockchain allows everyone to view material
history
— from point of origin to shelf.
Right now, proof of stake use cases are largely about verification and trust in
carbon
markets,
such as BxC partner Regen Network. Supply chain
transparency
is another established space for blockchain to shine.
Transparency and trust are pain points in the ESG space, and BxC believes that
open-ledger model blockchain platforms are the secret sauce.
“Eventually, every part in the supply chain will be trackable and transparent
[with blockchain],” Ford said. “The world needs blockchain now to solve scope
3.
Blockchain offers transparent carbon tracking that takes the smoke and mirrors
out of it; so, instead of voluntary reporting, blockchain has the opportunity to
solve
greenwashing
long term.”
Ford sees a world where it’s no longer a choice between voluntary and mandatory
reporting, but that everything will be transparent by default because the supply
chain will live on web3. The transition to web3 solutions will take buy-in from
large actors at scale to begin the ripple effects after key stakeholder
adoption; and this is where BxC comes in.
“We need a holistic understanding to move at breakneck speed if we’re going to
have any chance of hitting Paris Agreement goals,” Ford said.
As the smog of energy-intensive crypto
mining settles, the possibilities for blockchain as a climate solution are
becoming clearer. While BxC and the sector strategize on use cases for saving
the planet, Ford suggested to corporations:
“Get educated as soon as humanly possible. This wave is coming, and crypto and
blockchain are not the same thing.”
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Christian is a writer, photographer, filmmaker, and outdoor junkie obsessed with the intersectionality between people and planet. He partners with brands and organizations with social and environmental impact at their core, assisting them in telling stories that change the world.
Published Feb 28, 2023 7am EST / 4am PST / 12pm GMT / 1pm CET