BitMEX bought $100,000 worth of carbon credits, representing 7,110 metric tons of carbon dioxide emissions, enough to offset its bitcoin carbon footprint for the next year, the crypto exchange said in a blog post.
- The credits will match the environmental footprint from both its bitcoin transactions and the servers powering the exchange, making it one of the first crypto exchanges to become fully carbon neutral, BitMEX said in the post.
- BitMEX published the reasoning behind the conclusion in a separate post. The best way to approach carbon emissions for crypto exchanges is to figure out “how much electricity usage is incentivised per US dollar spent on transaction fees,” and then calculate the carbon emissions based on that, it said.
- The exchange then used what it called an “imperfect method” to compare the average electricity cost in kilowatt hours for bitcoin mining with the global average cost per kWh of electricity.
- Based on global prices, it found that every $1 spent on transaction fees could “incentivize” up to 7.4 kWh of “typical electricity usage,” which translates to 1 kilogram of CO2 emissions.
- This method should amend one proposed by FTX founder and CEO Sam Bankman-Fried in a May tweet, BitMEX said. Bankman-Fried estimated that $0.0026 is needed to offset $1 spent on bitcoin transaction fees.
- FTX has also committed to being carbon neutral and said it will donate $1 million by the end of the year to “some of the world’s most effective carbon offsetting organizations.”
- Using BitMEX’s methodology, exchanges could spend 5 cents per U.S. dollar of bitcoin transaction fees to offset emissions, which it says is a “small drop in the ocean.” The actual cost would depend on the price of offsetting carbon.
- For its carbon offsets BitMEX is working with Pachama, a company that remotely verifies reforestation projects through satellite imagery and artificial intelligence and then posts the offsets on a curated marketplace for enterprises. The exchange has picked reforestation projects in India, Peru, Brazil, Nicaragua and Colombia.
- The crypto industry should confront its problems and avoid “hollow promises and vague ESG pledges,” BitMEX said.
UPDATE (Nov. 2, 11:03 UTC): Adds details about FTX, BitMEX’s reforestation plans, and clarification in first bullet point.