Bitcoin exchanges FTX and BitMEX have committed to becoming carbon neutral by donating $0.0026 for every dollar spent on blockchain transaction fees to carbon-offsetting organizations.
“We estimate that we will pay roughly $60m in blockchain fees this year, which would imply about $150k in offsetting costs,” announced FTX. “Given the uncertainty in the calculations, we’ll be rounding that (way) up to $1m.”
It was FTX’s CEO Sam Bankman-Fried who crunched the numbers in response to recent concerns raised about Bitcoin’s energy consumption, including notably from Tesla CEO Elon Musk. The calculations took into account mining and electricity costs and the corresponding carbon dioxide (CO2) emissions. Finally, Bankman-Fried employed estimates of how much it costs to reduce one ton of CO2 emissions.
“So this implies, with large error bars,” Bankman-Fried concluded, “if for every $1 you spend on gas/blockchain fees, you donate $0.0026 to Cool Earth, you’ll be roughly carbon neutral.”
Bankman-Fried’s calculations are especially relevant for exchanges because of the bitcoin withdrawing services they provide –– which incur miner fees.
One day after FTX’s announcement, bitcoin exchange BitMEX followed to show its commitment to offset carbon emissions, thanking Bankman-Fried for his calculations.
“Today, we’re happy to confirm that BitMEX commits to becoming carbon neutral,” the company shared. “The first step we’ll take immediately is to start carbon offsetting emissions caused by withdrawals from the platform through donating at least $0.0026 for every $1 of blockchain fees our clients pay out.”
BitMEX hasn’t shared how much the donations would amount to and which institutions would benefit, but the company has committed to publishing details once it finishes researching.
The bitcoin energy consumption debate has gotten hotter over the past couple of weeks after Musk tweeted that Tesla would halt the acceptance of bitcoin as payment for its electric cars over environmental concerns.
Since then, many companies in the bitcoin space have committed to reducing their carbon footprint, including mining companies Greenidge Generation and Argo Blockchain, and Canadian Bitcoin ETF manager Ninepoint. Other firms have also done more profound research to shed light on the Bitcoin energy consumption narrative, comparing it to banking and gold. And in April, financial services company Square made the case that Bitcoin presents an opportunity to accelerate the global energy transition to renewables.