Carbon Neutral Cryptocurrency: How Does it Work?

The rise of cryptocurrencies has coincided with the era where ESG movement has gained significant support. This has put cryptocurrencies, particularly Bitcoin and Ether, in the limelight due to concerns around carbon emissions resulting from high energy consumption.

Carbon Offsetting for Bitcoin and Ether Funds

The rise of cryptocurrencies has coincided with the era where ESG movement has gained significant support. This has put cryptocurrencies, particularly Bitcoin and Ether, in the limelight due to concerns around carbon emissions resulting from high energy consumption. While the debate continues, we have partnered with Patch to measure and offset the carbon footprint of our portfolio so you can invest in Bitcoin or Ether without worrying about the environmental impact. Here is how we do it:

Step 1: Calculate Average Efficiency of Mining Equipment

This number represents the amount of energy mining equipment use to generate a given amount of output (hash rate).

E.g. 0.1 Joules per Gigahash


Step 2: Calculate Daily Energy Usage

We use the efficiency value from Step 1 and multiply with daily hash rate of the network to calculate total energy usage.


Step 3: Calculate the Weighted Average Emissions Factor

For this calculation, we answer two questions:

1) What is the distribution of mining activity?

  • Country A: 40%
  • Country B: 60%

2) What is the carbon footprint of each country?

  • Country A: 10 tonnes of CO2 per MWh
  • Country B: 5 tonnes of CO2 per MWh

Then we take the weighted average.


Step 4: Calculate Network’s Carbon Footprint

Once we know the energy usage of the network and how much carbon is emitted for that usage, we multiply them.


Step 5: Map Network Level Daily Emissions to Our Holdings

We allocate carbon emissions to our portfolio based on our daily holdings as a percentage of total supply.

  • E.g. Holding 1% of total supply means we are responsible for 1% of the carbon emissions of the network.

Step 6: Offset Carbon Emissions

We buy and expire carbon offsets for our share of emissions.

Read the full methodology on how we measure and calculate our missions achieving carbon neutrality.


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