Accounting for carbon emissions caused by cryptocurrency and token systems
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The energy consumption and related carbon emissions of cryptocurrencies such as Bitcoin are subject to extensive discussion in public, academia, and industry. As cryptocurrencies continue their journey into mainstream finance, incentives to participate in the networks and consume energy to do so remain significant. First guidance on how to allocate the carbon footprint of the Bitcoin network to single investors exist, however a holistic framework capturing a wider range of cryptocurrencies and tokens remains absent. This white paper explores different approaches of how to allocate emissions caused by cryptocurrencies and tokens. Based on our analysis of the strengths and limitations of potential approaches, we propose a framework that combines two key drivers of emissions, block rewards and transaction fees.
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