Methodology
We are determined to set a high bar for the industry in the fight against climate change.
We have partnered with Carbon Responsible for an independent calculation of the environmental impact of our products, using a transaction-based approach. This is measured every six months and we offset all incremental carbon emissions by selecting high quality impact projects from carefully chosen partners such as Native.
Since 2021, we have invested in a wide range of projects with the highest integrity, targeting many forms of environmental and social impact, including green energy, nature revitalisation and the provision of clean water. Please find details on a selection of projects that we have supported below. On request, for example, if you are an institutional investor conducting due diligence on the issuer and products, we are happy to provide full information on all the impact projects we have invested in and can also share verification certificates for all credits invested in in order to mitigate relevant emissions, including for retired units.
What is Bitcoin?
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Climate Action Projects to date
Partners
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Carbon Responsible helps Bitwise calculate relevant carbon emissions in line with its recommended methodology. Established in 2012 with a focus on addressing emissions in the travel sector, Carbon Responsible has evolved into a leading provider of a comprehensive industry database, playing a crucial role in guiding industry reporting standards. Expanding beyond its initial scope, the company now specialises in robust corporate and investment reporting on emissions and sustainability matters more broadly. -
Native specialises in crafting impactful climate action projects, driving change at the community level. Bitwise collaborates with Native as an independent provider to purchase high-impact gold-standard carbon credits. Over two decades, the company’s track record showcases its commitment to catalysing transformative initiatives that deliver vital carbon and biodiversity benefits. Collaborating with more than 500 corporate supporters, Native assists companies in fulfilling their sustainability goals. As a certified Public Benefit Corporation and thrice-honored 'Best for the World' B Corp, Native collaborates with entities dedicated to creating meaningful social and environmental impacts.
FAQs
Bitwise has stringent criteria for partnering with service providers, emphasising quality and transparency in the selection process. Specifically for this initiative, we sought involvement from two independent entities: one to aid in formulating the methodology, overseeing ongoing monitoring and calculations of relevant emissions related to Bitwise products, and another as a climate project partner. The latter advises on impactful projects and facilitates Bitwise's acquisition of premium carbon credits. The deliberate separation of these functions is paramount, as it ensures the avoidance of potential conflicts of interest.
Our criteria for choosing climate action projects prioritises tangible impact. We meticulously vet and continually monitor partners to uphold our sustainability initiative's rigorous standards. Transparency and adherence to the highest industry benchmarks are key factors when it comes to selecting projects, as our commitment to responsibility drives our engagement in high-impact carbon programs aimed at reducing or eliminating greenhouse gases (GHGs). Crucially, these programs should not only address emissions but also empower the communities where these projects are deployed, aligning with Bitwises focus on impactful and community-oriented initiatives.
Bitcoin's energy usage is notably lower than that of many other industries, including traditional banking and gold mining. Meanwhile, Bitcoin mining relies on roughly 60% renewable energy sources, which compares favourably to sectors like finance (around 40% renewable). This data demonstrates Bitcoin's efficiency and comparatively low environmental footprint.
Despite a doubling in hash rates since 2021, total emissions have plateaued. This stabilisation is attributed to reduced emission intensity, resulting from the increased percentage of renewables in energy consumption and significantly improved efficiency. Moreover, this trend is anticipated to persist due to ongoing technological advancements, akin to the principles of Moore's Law, well into the foreseeable future.
A hash rate represents a computer's processing speed in creating (mining) new Bitcoin or other cryptocurrencies. Higher hash rates signify the need for increased computational power in performing this task.
A hash rate represents a computer's processing speed in creating (mining) new Bitcoin or other cryptocurrencies. Higher hash rates signify the need for increased computational power in performing this task.
Bitcoin has the potential to achieve net-zero status – or even become net carbon negative – through investment in flared and vented gas mining infrastructure. Methane is a potent greenhouse gas that possesses a global warming potential (GWP) that is more than 80 times higher than that of CO2, as highlighted by the United Nations.
By mitigating emissions from flared and vented gas operations, and using the energy for Bitcoin mining purposes, the carbon footprint of Bitcoin operations could be transformed. Estimates suggest that an investment as modest as $500 million into vented gas mining infrastructure could deliver Bitcoin net carbon negative status.
By mitigating emissions from flared and vented gas operations, and using the energy for Bitcoin mining purposes, the carbon footprint of Bitcoin operations could be transformed. Estimates suggest that an investment as modest as $500 million into vented gas mining infrastructure could deliver Bitcoin net carbon negative status.
ESG
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Social
As a disruptive and relatively recent innovation, the social impacts of Bitcoin and cryptocurrency, both positive and negative, are still emerging. However, two evolving benefits brought by cryptocurrencies are already evident: financial inclusion and economic empowerment. Many consider that human bias typical of traditional financial services can play out by discriminating against minorities, whether on ethnic, gender, religious or other grounds. Being free from these biases, cryptocurrencies are entirely inclusive, as evidenced by their growing popularity amongst certain minority groups.‘Sending money home’ has always been a way that emigrants have helped their families, and some of the poorest countries in the world rely on these overseas remittances. In fact, they can be a meaningful part of national GDP. The incumbent remittance industry charges in the order of $25 billion per annum in transfer fees for funds often used for basic fundamental needs such as housing, education and healthcare. By contrast, cryptocurrencies enable this transfer at no cost, using a smartphone. The result? More and faster economic empowerment for those who need it most.
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Governance
Being decentralised, and with embedded democratic and inclusive decision-making procedures, Bitcoin and cryptocurrencies employ a totally different governance system to traditional financial institutions. This contrast makes direct comparison between the two difficult, and both have advantages and disadvantages. Governance advantages of Bitcoin and cryptocurrencies include transparency and traceability. For instance, rather than relying on a selected - and generally exclusive - board to make strategic decisions around risk management and core procedures, the process is open to everyone in the community.What’s more, it is transparent and all transactions are fully traceable, which is often not the case in the traditional financial system. A governance and transparency challenge for the crypto ecosystem is that individual identities can be difficult to trace, however this will likely change further down the road.
Bitcoin's positive social impact
Bitcoin's environmental impact
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