On Bitcoin Mining, Renewable Energy, and Sustainability Reporting

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This essay is a lightly edited version of a Twitter thread I posted.

There’s been a lot of back and forth this year on Bitcoin’s energy usage. 

Bitcoin mining consumes a lot of electricity, but that doesn’t necessarily mean it’s bad. The problem is when that electricity is sourced from fossil fuels like coal. 

It’s very difficult to estimate the percentage of mining that is based on renewable energy. Estimates range from 39% to 73%

One of the reasons why it’s so difficult to estimate is because corporate financial reporting doesn’t disclose environmental footprint. Marathon Digital’s 10-K, for example, doesn’t mention how much of their energy is renewable. 

Bitcoin miners need to adopt sustainability reporting. ESG assets could become a third of total AUM by 2025, or nearly $53 trillion. This is an incredible opportunity for miners to attract billions of dollars in long-term focused capital and accelerate renewable energy investment

The best place to start is by adopting SASB standards. SASB, which stands for Sustainable Accounting Standards Board, was founded in 2011 by Dr. Jean Rogers. It’s arguably the best framework for linking sustainability information to corporate performance. Over 1,000 companies have used it in the past two years. None of them were bitcoin miners. 

For an example of SASB standards, check out the below table which lists accounting metrics for ‘Environmental Footprint of Hardware Infrastructure’:

Source: SASB Standards, Software & IT Services

Now here’s an example of Amazon using this standard in their 2020 Sustainability Report:

If bitcoin mining companies adopted these metrics, we would be able to better estimate the percentage of renewable energy that mining uses. Perhaps they don’t want to because the actual results would be scary. But at least we know our starting point to a more sustainable future. 

Companies that start today will signal who is serious about sustainable mining, attracting the long-term focused capital they need to continue building well into the future. Enhanced transparency will also enhance public trust, improving relations with key stakeholders like energy partners and regulators.  

Sustainable mining investors also win. Research has shown that effective stakeholder management positively impacts shareholder value. But it starts with adopting sustainable reporting. As Peter Drucker once said, “If you can’t measure it, you can’t manage it”. 

Bitcoin miners — start measuring your environmental footprint. The world is watching.

Thanks to the Foster Writing members that contributed to editing: Tom White and LaKay Cornell.