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1) Ok, so how much CO2 does BTC actually create? How much of a worry is it?

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1) So on energy usage of BTC: The profile will change long-term. Right now the main driver is from block rewards. But as block rewards exponentially decay, those will become less relevant. Long-term, there are really two core drivers.

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2) NOT... advice, really. Just math.

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3) Ok, so. Let's say you spend $X on BTC/ETH blockchain fees (or any PoW currency). Those $X are going to miners in a bidding war for block slots. In an efficient market, as long as it's profitable to run a BTC/ETH mining rig, more people will open them up.

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4) So in equilibrium, it should be a bit above breakeven: if they're paid $X, they must have < $X of total expenses. So gas fees ~ 1.5 * mining costs. mining costs are 1/2 electricity 1/2 machines, which take electricity. So 3/4 * mining costs ~ $ spent on electricity.

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5) Something like 1/3 of mining rigs run on renewable electricity, so dirty electricity ~ 2/3 * $ spent on electricity. Electricity that miners use costs ~$0.05 / kWh. Each kWh of dirty electricity produces about 0.0004 tons of CO2.

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6) Finally, how bad is one ton of CO2? Well, givingwhatwecan.org/report/cool-ea estimates about $1 to reduce CO2 emissions by 1 ton.

8:32 PM · May 20, 2021Twitter Web App

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7) Ok, so putting it all together.... a) $x in gas b) * 2/3 --> in mining cost c) * 3/4 --> electricity d) * 2/3--> dirty electricity e) / $0.05 --> kWh f) * 0.0004 --> tons of CO2 g) * $1 --> cost to offset 2/3 * 3/4 * 2/3 / 0.05 * 0.0004 * 1 = 0.0026

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8) So this implies, with large error bars: If, for every $1 you spend on gas/blockchain fees, you donate $0.0026 to Cool Earth, you'll be roughly carbon neutral.

-- does this seem right? If so, I think the environmental worries about BTC are pretty easily offset!

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Reforestation schemes have a lot of uncertainties in their carbon accounting and that $1 per CO2e tonne is definitely way on the lower end of the scale of industry estimates.

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Because of fundamental problems with offsets generally (see ‘additionality’), they are probably mispriced considerably lower than they should be because they aren’t offsetting the carbon they claim. Therefore not a good proxy value for cost of carbon

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$1/tonne is not going to get you real, new, proven emissions reductions. I'd recommend $10/t ballpark, which in a big buy would really start out with lower cost tonnes, & end with higher. Carbon offsets are the appropriate tool with which to "#offset" emissions made mining $BTC.

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