Environmentalists have always been quick to criticize Bitcoin and the crypto sector as “polluters”. However, once you look beyond the clichés, you realize that cryptocurrencies and blockchain technology (DLT) can, on the contrary, help improve environmental protection.
A crypto that accumulates millions of tons of carbon credits
The community around KlimaDAO (KLIMA) aims to promote better carbon offset projects to compensate for greenhouse gas emissions, such as CO2. The more greenhouse gases an industry/company produces, the more carbon offsets it will have to buy, which will finance climate projects.
In a recent publication, KlimaDAO explains that it has already managed to accumulate more than 9 million tons of carbon credits, with an estimated offset value of $100 million:
“Just over 9.1 million BCTs (base carbon tonnes) are locked up in KlimaDAO’s treasury. That’s more than the equivalent of the annual emissions of Georgia, Jamaica or Papua New Guinea, and almost as much as Honduras or Cameroon.”
Carbon credits with artificially inflated prices?
Each BCT was turned into a digital asset, each representing 1 ton of carbon from the Verified Carbon Unit (VCU) registry. These crypto-assets have been linked to the Polygon (MATIC) network via the Toucan protocol. KlimaDAO hopes to cause an increase in the price of BCT tokens. To do this, the project offers fee sharing on the one hand and incentives via the following liquidity pools on Sushiswap: KLIMA/BCT and BCT/USDC.
The fees earned by the protocol, for providing liquidity in these pools, would already amount to nearly $5.5 million, while they were launched less than a month ago, on October 18, 2021.
According to CoinTelegraph, the KlimaDAO teams want to “put upward pressure on the price of carbon offsets. This is so that “virtuous” businesses – which generate carbon offsets – will be more profitable when selling their BCT to “polluting” industries (which must buy carbon credits).
Although this is already a demonstration of the environmental utility of blockchains, by enabling this carbon credit marketplace, it is far from being the only one. Indeed, in Canada, the mining of bitcoins will avoid the emission of 20,000 tons of greenhouse gases, by allowing an entire neighborhood to heat itself without using natural gas.