Crypto’s Sustainability Dilemma, and What We’re Doing About It

The version of this article also appeared in Global Digital Finance’s Sustainability Industry Report, published on 1 November. 

A message from Alexander Höptner, CEO of BitMEX

Sustainability is the challenge of our time. Bitcoin – and cryptocurrency in general – is the transformative technology of our time. Especially around COP26, it’s only natural that crypto faces tough questions about the environmental impact of the technology that enables our work. Industry leaders – BitMEX included – need to embrace this challenge head-on. 

Crypto’s environmental impact is perhaps the issue that has caused the most controversy and consternation in the last year. There are a couple of reasons behind this. We think understanding, and acknowledging them, is crucial to rallying the industry to respond positively. 

First, we should be mindful that the debate about the utility of crypto is still raging, and those who are skeptics of the technology use its environmental impact as an opposing talking point – and this criticism can be intellectually dishonest. We work in this industry because we are confident about the fundamental utility of crypto. But not everyone feels this way, so we should engage constructively with those willing to engage in good faith. 

Second, a key tenet of bitcoin (and other cryptos) is decentralisation. The fact that no one person, or group of people, controls the bitcoin protocol is the key to its resilience and utility. This makes bitcoin indestructible and radically inclusive at the same time. Yet, many of the proposed solutions to Bitcoin’s environmental impact emanate from perceived centralised, or exclusive, groups like Michael Saylor and Elon Musk’s Bitcoin Mining Council. Community members know that if they give power and influence to centralised actors, they could end up regretting it. Just look at the crypto world’s love affair – then breakup – with Elon Musk earlier this year as an example.

That being said, as leaders in the industry, it is up to us to make a strong commitment to invest in a future where crypto is ever more responsible. That’s why BitMEX today became carbon neutral, starting by offsetting the emissions caused by our Bitcoin transactions and by the servers that keep the platform running. This is important because it allows us to mitigate the environmental impact of our current activity while we make more structural, long lasting plans. We will continue to be vocal about challenging others in the industry to do the same. 

But mitigating the environmental impact of our current activity is only a first step. As an innovative industry, we can and should do more than just offsetting carbon emissions. I see two ways to move forward from here. 

First, we need to invest in education about the true environmental impact of bitcoin and other cryptocurrencies, increasing access to reputable sources of information. Estimates of the size and severity of Bitcoin’s carbon footprint vary widely, but we are in a position to lend our expertise to help settle the debate. As part of our education efforts, we also should broaden people’s understanding of the true utility of bitcoin and other crypto as revolutionary technologies that will improve lives. As crypto matures, there is also the potential for it to substitute for other energy intensive industries – especially through DeFi. The more time we spend communicating about the macro benefits of crypto – economic empowerment, trustless transactions, DeFi, and Web 3.0, the more people will see the true power of the technology, rather than thinking it’s all about CryptoKitties. 

Second, we should work with – and invest in – people and organisations who are committed to using innovation to lower cryptocurrency’s structural environmental impact, but who will do so in a way that respects the fundamental utility of the technology and its highly decentralised nature. We will find our breakthrough by creating incentives for research and development, but also by letting blockchain technology be part of the solution. 

Finally, it should be acknowledged that many of these solutions are in very early or theoretical stages. This reflects the fact that our industry is still relatively young – and certainly when compared to the structures of traditional finance. But as responsible innovators, we need to move quickly, and be held accountable for what we say we will do. There’s a lot at stake here, and we owe it to ourselves, each other, and the coming generations to make progress.