As the negative impact of climate change becomes apparent all over the world, every person and business has a responsibility to bear. Cudos, a decentralized cloud computing network developed by Cudo, enters with one of the greenest overall tech stacks and layer 1 blockchains, providing users and developers with access to scalable cloud computing services via the Cudos blockchain to the Cudo ecosystem, which has more than 60,000 nodes distributed across the globe.
Invezz talks to Cudo CEO Matt Hawkins about the company’s partnership with Spanish-based ClimateTrade, a blockchain-based carbon credits company, and other pertinent issues within the space.
1. What specific challenges do entities face in creating and operating green blockchains?
This depends on the type of blockchain consensus mechanism. A Proof-of-Work (PoW) blockchain like Bitcoin is hugely energy intensive and so carbon offsetting would reduce profitability during a buoyant market and potentially remove profitability during a bear market. It is therefore better to focus on sourcing green energy for PoW operations, with the majority of mining farms (56% according to the Bitcoin Mining Council) now operating with 100% renewable energy. These farms can operate in remote locations with access to this power as Bitcoin mining is not location or latency sensitive.
For Proof-of-Stake (PoS) blockchains like Cudos, the amount of energy consumed is fractional in comparison and will run on hardware with a longer life cycle than a Bitcoin ASIC machine. Less carbon is therefore being produced in the manufacturing process for a PoS network as well. As the PoS masternodes or validators are typically hosting within well known hosting facilities that can guarantee high availability and security, the challenge shifts to locating a hosting provider that sources 100% green energy, as these facilities tend to be nearer to main data centre hubs in large cities to meet low latency requirements for other verticals such as finance, and therefore source mixed energy from the grid. In this scenario, the option to offset the carbon produced is often the best option.
2. What do you hope to achieve out of your partnership with Climatetrade? How will you measure progress/success?
Our goal is to build a sustainable blockchain and computing ecosystem that falls under our parent’s company mission statement of ‘Making better use of the world’s computing power.’ The partnership with Climatetrade is not the first step we have taken, as we bought a bulk of carbon credits for wind and solar projects in India when parent company Cudo was formed.
However, with the Cudos Network, our layer-1 blockchain publicly launching in the near future, we wanted to ensure that the network was 100% carbon neutral from day 1. We reviewed multiple options, but the decision to partner with Climatetrade was very simple. The fact they are onchain, means there is full transparency of how many credits are being bought and where those credits are being spent. This is an area that has come under criticism for other offsetting projects in the past, where the true cost for carbon tonnage for renewable projects has often been obscured.
3. What is the most accurate way to measure the carbon footprint of cryptocurrencies?
This is a tricky one, you see social media posts and articles often pick up on an energy total that is incorrect. For example, an NFT transaction on Ethereum in carbon produced, does not equal the Ethereum network’s carbon footprint in any given moment divided by the amount of transactions at that time. Take all the transactions away and the carbon footprint of the Ethereum network is almost identical, as the energy consumption is predominantly the PoW hashing, rather than the transactions. The carbon footprint of cryptocurrencies or NFTs as in the example above, is therefore low, it’s the PoW networks that are producing the majority of carbon emissions.
4. Is it merely enough to embrace a ‘carbon neutral’ goal? For example, Microsoft plans on being carbon negative by 2030. Is a carbon negative outcome (be it in 2030 or beyond) a realistic goal for the crypto/blockchain universe?
It should be a target for every industry. In blockchain, I think this is realistic by 2030 as everything is still at an early stage and has the opportunity to innovate at speed. Take our network for example, it is always going to consume electricity, even if fractional compared to a PoW network, so it would be fairly simplistic for us to buy more carbon credits through Climatetrade, than the amount of carbon the network is producing. We would then look at all aspects of Cudos as a business, not just the daily electricity consumption of the network. The hardware manufacturing for the validator nodes, the hosting facilities, and business operations. It all adds up, but the decision is predominantly with us to make the necessary decisions. My point is that we are able to innovate quicker as a new industry, in comparison to an industry such as animal agriculture, where consumer consumption of meat and consumer demand for low price has led to significantly increased carbon emissions. For agriculture to become carbon negative by 2030, is very unrealistic as the industry would have to first change the behaviour of their consumers, whilst remaining competitive.
5. Can you comment on Elon Musk’s concern that Bitcoin isn’t “green enough”?
I agree with his concern. There is more renewable energy available now and the price of renewables is lower in many regions than fossil fuels. Coupled with the recent mining ban in China where 75% of mining was using coal sourced power, the Bitcoin market is certainly becoming greener. However, there are still cheap fossil fuel regions offering solutions to miners and not all miners are fussed about the fuel source. Their main driver is cost and as we saw from the recent Bitcoin Mining Councils report, renewable energy still only accounts for 56% of the Bitcoin network’s total consumption. The question is, how can we educate and / or incentivise miners to adopt renewables?
6. How effective do you think the so-called ‘Crypto Climate Accord’, adopted by the private sector, can be in eliminating cryptocurrencies’ carbon footprint?
Time will tell how effective it will be as there are cultural changes to make, but I am all for it, to have an industry wide collective driving the right behaviour forwards, should be supported, not critiqued. I have seen the term ‘greenwashing’ used too many times as a reactionary comment or defense. It’s time for action!
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