- Awareness of crypto’s estimated carbon footprint has been steadily growing, with 2021 seeing much more media content and engagement around that issue.
- As Tesla dictated the debate with its decision to no longer accept Bitcoin over climate concerns, many crypto mining companies, such as Greenidge Generation, Argo Blockchain and TeraWulf got under the media spotlight because of their energy use.
- We suggest that crypto companies should become ESG thought leaders, capitalise on the tech industry’s cleaner image and communicate the measurable benefits of specific initiatives to prevent greenwashing accusations.
View a one-page infographic summary of the analysis.
The ever-growing media conversation around climate change usually revolves around fossil fuels, plastic, farming and industrial pollution. But in recent years, the discussion has turned to cryptocurrency, with more and more publications scrutinising the energy costs of crypto mining, which is how new digital coins are created. The mining process, particularly bitcoin mining, uses an immense amount of energy, while the race among would-be crypto millionaires to build the most powerful mining rig produces a lot more electronic waste than fat bank accounts.
Since Bitcoin’s release, it’s become progressively harder to mint new units of currency through mining. This was by design, as the currency was capped at 21 million units – so the more units minted, the fewer units there are available to mine, and the more computational power it takes to mint new ones. Digital currencies were made to be difficult to mine and take a lot of computing power to generate so no one person or group could take control of the entire network.
The environmental concern comes from the estimated carbon footprint generated by the power plants providing that energy. The Cambridge Bitcoin Electricity Consumption Index indicated that bitcoin, the most widely-mined cryptocurrency network, uses 122.87 Terawatt-hours of electricity every year—more than whole countries like the Netherlands, Argentina, or the United Arab Emirates.
And it isn’t just mining that uses lots of power—a single Bitcoin transaction is estimated to burn 2,292.5 kilowatt-hours of electricity, enough to power a typical US household for over 78 days. There’s also the issue of physical electronic waste. Computers, graphics cards, purpose-built ASIC rigs, and more are used for mining. Since increased computing power translates to an advantage in the race to mine more coins, people are constantly upgrading and throwing away old equipment, producing up to 30,000 tons of electronic waste every year.
Facing criticism from politicians and environmentalists, the cryptocurrency mining industry has embarked on a rebranding effort to challenge the prevailing view that its electricity-guzzling computers are harmful to the climate. All five of the largest publicly traded crypto mining companies say they are building or already operating plants powered by renewable energy, and industry executives have started arguing that demand from crypto miners will create opportunities for wind and solar companies to open facilities of their own.
The effort — which some critics think is nothing more than a public-relations exercise — has intensified since last spring, when China began a crackdown on crypto mining, forcing some mining operations to relocate to the United States. A trade group called the Bitcoin Mining Council was also formed last year, partly to tackle climate issues, after Elon Musk criticised the industry for using fossil fuels.
Growing awareness
Analysing the debate’s engagement and content over time, we found that 2021 saw much more engagement and content around crypto’s environmental impact than 2020 – meaning that awareness of the issue has been steadily growing:
There was a visible peak in May 2021, when Tesla suspended vehicle purchases using bitcoin, citing environmental concerns. This came after Tesla’s March announcement that it would accept the cryptocurrency was met with an outcry from some environmentalists and investors.
Elon Musk said that his company was concerned about the rapidly increasing use of fossil fuels for bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel. The billionaire added that he believed cryptocurrency has a promising future, but it cannot be at great cost to the environment.
Many saw the move as an attempt by Tesla to assuage the concerns of investors who are focused on climate change and sustainability. “Environmental, Social and Corporate Governance (ESG) issues are now a major motivation for many investors. Tesla, being a clean energy-focused company, might want to work better in the environmental area of ESG,” Julia Lee from Burman Invest told the BBC.
Another peak in content and engagement occurred in June 2021, when Musk has said that Tesla will resume allowing bitcoin transactions when there was confirmation of reasonable (~50%) clean energy usage by miners with a positive future trend.
Also in June, the new Bitcoin Mining Council was created to improve the cryptocurrency’s sustainability and encourage miners to use renewable sources. That same month, Swedish authorities called on the European Union to ban “energy-intensive” crypto mining, saying cryptocurrency’s rising energy usage is threatening Sweden’s ability to meet its obligations under the Paris Climate Agreement.
And in November, the Global Digital Finance association, whose members include industry juggernauts BitMEX, Coinbase and Abu Dhabi Global Market, called for greater data transparency around issues of sustainability. The group published a report in an effort to set industrywide environmental goals amid greater scrutiny of Bitcoin’s contribution to global warming. The report contemplated how best to measure the environmental impact of digital assets, digs into their social utility and warns policymakers against making a trade-off.
Sustainability race
We used Commetric’s proprietary ‘media conversation impact score‘ metric to identify the organisations with the biggest impact on the media discussion around crypto’s environmental impact in a research sample of 873 English-language articles published in top tier outlets during the last 12 months.
We determine an organisation’s media impact in the context of a topic by looking at its media influence score calculated in terms of coverage by high-profile media outlets, topic relevancy score measuring its contextual relevance, and media visibility as measured by the number of mentions.
Of course, the news around Tesla‘s suspension of vehicle purchases using bitcoin out of climate concern made the electric car maker the most influential company in the debate:
Tesla was followed by Greenidge Generation, a bitcoin mining facility in upstate New York, which said it’s the first carbon-neutral bitcoin miner in the U.S. The company became an object of protest in mid-April, as nearly 150 local environmentalists marched to its gates in a last-ditch effort to block its expansion.
Greenidge Generation uses its own power plant, running a once-mothballed plant to produce about 44 megawatts to run 15,300 computer servers, plus additional electricity it sends into the state’s power grid. Proponents called it a competitive way to mine cryptocurrencies, without putting a drain on the existing power grid.
However, environmentalists saw the plant as a climate threat. They feared a wave of resurrected fossil-fuel plants pumping out greenhouse gasses more for private profit than the public good. Seeing Greenidge as a test case, they askеd the state to deny the renewal of the plant’s air quality permit and put the brakes on similar projects.
Earthjustice, a nonprofit dedicated to litigating environmental issues, earned its influence in the debate by commenting on the case, saying that the current state of our climate demands action on cryptocurrency mining: “We are jeopardiяing the state’s abilities to meet our climate goals, and we set the stage for the rest of the country as a result.”
Other organisations earned their influence by providing thought leadership and insights into the energy consumption of the crypto network. For example, research platform Digiconomist, which publishes estimates of bitcoin’s climate impact, put bitcoin’s annualised emissions at 37 million tons of carbon dioxide, which is on par with New Zealand.
Bank of America, on the other hand, said in a note that bitcoin is “not good news for the environment,” estimating that it uses almost the same amount of electricity as some developed countries and rivals emissions produced by some corporate heavy-hitters like American Airlines and ConocoPhillips.
Some mining companies got under the media radar for promoting their efforts to work sustainably. For example, Argo Blockchain claimed it’s trying to do something environmentally responsible by having a crypto mining site fueled mostly by wind and solar energy. In the future, Argo plans to build its own solar panels in Texas and broker deals with local renewables companies to buy energy directly.
Another mining company, TeraWulf, pledged to run cryptocurrency mines using more than 90% zero-carbon energy. It has two projects in the works — a retired coal plant in upstate New York fueled by hydropower, and a nuclear-powered facility in Pennsylvania. “Everyone I talk to now is talking about carbon neutrality,” Paul Prager, the chief executive of TeraWulf, told the New York Times. “The language has absolutely changed.”
In the meantime, mining company Bitfarms estimated that among other publicly-traded cryptocurrency mining companies, it has mined the largest amount of bitcoin with renewable energy. The company said it currently powers approximately 1% of the bitcoin network with more than 99% “green” hydroelectricity.
The most influential crypto start-up was Chia, created by BitTorrent inventor Bram Cohen to provide “green money for a digital world”. The theory behind Chia’s cryptocurrency is that anyone sitting at home can download its technology, which like bitcoin enables decentralised payments, and run it on their computer using storage space. According to its white paper, the process of creating Chias uses up to 10,000 times less energy than bitcoin’s mining technology because bitcoin is mined using a concept called ‘proof of work’, which involves solving computationally complex puzzles in order to unlock new tokens.
Perhaps the best-known tech company in our sample, Intel, made headlines by announcing that it’s investing in blockchain technology with a new chip designed to mine cryptocurrency sustainably, planning on “developing the most energy-efficient computing technologies at scale.” The world’s largest chipmaker has time and again reiterated its commitment to sustainability and plans to continue working on developing technologies that meet environmental, social and computing goals.
Another tech company, Ripple, has added its voice to the ongoing cryptocurrency sustainability pool with the announcement that it aims to hit carbon net-zero by 2030. And it has partnered with various sustainability leaders like the Renewable Energy Buyers Alliance (REBA) and the Energy Web Foundation to achieve that aim.
Crypto people making green statements
Not surprisingly, Elon Musk was also the most influential spokesperson in the debate:
Another influential celebrity CEO was Jack Dorsey, who tweeted that “bitcoin incentivises renewable energy” the day before Earth Day last year. To support his assertion, Dorsey shared a new white paper from Square, which argued that “bitcoin mining presents an opportunity to accelerate the global energy transition to renewables,” and “could encourage investment in solar systems.”
The second most influential spokesperson after Musk was the Dutch economist Alex de Vries, founder of research platform Digiconomist, who was widely cited as saying that bitcoin chomps through around 78 terawatt-hours (TWh) a year globally — equivalent to the consumption of Chile, a country of 20 million.
Vries noted that as the price rises, bitcoin could consume as much energy as all the data centres in the world combined: “At least other data centres are providing us with cloud computing used by billions every day. Hardly anybody is using bitcoin,” he added.
Fred Thiel, CEO of crypto-miner Marathon, came third in terms of influence as he remarked that his company is focused on moving towards renewable energy, saying cryptocurrency miners can provide crucial financial incentives to build more clean energy projects: “We had previously done what many miners do, which is you find an industrial building, set it up for mining and then you contract for power from the grid. And we wanted to flip that model upside down because we knew that there are lots of underutilised energy generation sources in the U.S.”
But not all influencers were corporate representatives: Mike Winkelmann, the artist known as Beeple, who became famous for selling an NFT piece for $69.3 million, was cited as one of the founding members of the Social Alpha Foundation (SAF), a blockchain-focused charity, which is auctioning off work donated by the collective of NFT artists. All of the proceeds will go to Open Earth Foundation, a nonprofit focused on cutting edge research and deployment on the use of open digital infrastructure, including blockchains, for climate accounting under the Paris Agreement.
The most prominent government official was El Salvador’s President Nayib Bukele, whose country became the first one to adopt bitcoin as legal tender. Bukele said in a tweet that the Central American country had mined its first bitcoin using clean energy from volcanos. Many Twitter users marked this a momentous occasion, as using renewable volcano power to mine bitcoin means the process to extract coins from blocks of data in the network is less carbon-intensive.
Another influential government official was Massachusetts Democratic Senator Elizabeth Warren, who blasted the energy use while chairing a Senate Banking subcommittee hearing that explored issues with existing cryptocurrencies as well as whether the U.S. Federal Reserve should issue its own. Later in a Bloomberg TV interview, she called cryptocurrencies “an environmental disaster.”
How can crypto companies rebrand themselves?
Some crypto and blockchain companies have already realised the enormous role of comms, snapping up high-profile public relations execs to head off emerging crises, influence media coverage, and capitalise on increasing investor and consumer interest. For example, Patrick Hillmann, a well-known crisis wrangler, left Edelman to lead communications at Binance, the world’s largest crypto exchange. And Former Googler Rachael Horwitz joined tech investment firm Andreessen Horowitz to lead its crypto communications.
However, investing in PR and comms would become an even higher priority amid the growing need for crypto companies to rebrand themselves as environmentally friendly. Based on our analysis, here are a few tips how this might be achieved:
- Become an ESG thought leader. In our previous crypto analysis, we found that while companies have already started engaging with issues like regulation more proactively, not many aimed to be thought leaders on ESG issues. In addition, the pledge-centred strategies – e.g., promising to hit carbon net-zero by 2030 – could often sound reactive to the numerous research findings blaming crypto for contributing to climate change. A recent poll showed that by 45% to 18%, Britons say they would support banning cryptocurrencies in order to help tackle climate change, including 29% who would “strongly support” it. Crypto companies need to position themselves as part of the solution. Look at how Big Tobacco continuously aims to reposition itself as an innovative, tech-savvy champion of quitting and youth tobacco prevention. The most successful example in our recent study was Philip Morris, which was covered in a positive light for its efforts to reimagine itself as a broader healthcare and wellness company.
- Capitalise on the wider tech industry’s cleaner image. Many industries like oil and gas, FMCG and fashion have a pretty hard time rebranding themselves, as they’re already major polluters in the minds of consumers. However, tech still has a cleaner reputation, not least because people tend to associate tech companies with innovation rather than carbon emissions. But that isn’t stopping some of the most famous tech brands to earn positive media coverage with climate initiatives – for example, Apple committed to becoming completely carbon neutral across its business, products and manufacturing supply chain, while Google has a dedicated “sustainability” landing page, where the tech giant outlines its goals to combat climate change — like being carbon-free by 2030 — and shows status reports on its environmental efforts, such as making a “hyperlocal” air quality map. Crypto companies might capitalise on the wider tech industry’s reputation for being ahead of the game before taking all the blame.
- Beware of greenwashing. The term “sustainability” is at risk of becoming so overused that it soon wouldn’t mean much to consumers. In fact, many feel that brands hawking a sustainability ethos are just engaged in “greenwashing” to reap the market benefits of an eco-consciousness they can’t actually prove they’re practising. This is already happening in crypto. For example, when Square released a white paper that argued that Bitcoin mines could create a “customer of last resort” for green power plants, critics slammed it as “greenwashing,” pointing out that inserting bitcoin mines into renewable energy grids will do little to solve the key issue facing wind and solar generation: storing excess energy for future periods of high demand. To prevent greenwashing, brands should communicate the measurable benefits of specific initiatives rather than sweeping comments that attempt to paint the company in a positive light. Efforts in the latter category may come across as disingenuous.
- Focus on a positive impact rather than just doing less harm. As we pointed out in our recent analysis, “conventional sustainability”, as some scholars call it, recognises that the unfettered use of environmental resources is detrimental for continued human existence. In this conceptualisation, the focus is anthropocentric and largely on how to enable continued economic development within a context of finite resources. But by now it’s clear—doing less harm is not going to be enough. Crypto companies should tap into the emerging concept of “regeneration“, which goes beyond mitigating harm and means actively restoring and nurturing, creating conditions where ecosystems and economies can flourish. In other words, regeneration includes and transcends conventional sustainability, adopting a more holistic worldview, seeing humans and the rest of life as one autopoietic system.