This Week in Web3forGood

A weekly roundup of the ways Web3 tech can used to make the world a better place.

Apr 08, 2022

Greetings Readers,

It’s Week 5 of our Web3ForGood newsletter experiment, and we have been learning a lot. Thank you to everyone who has sent us feedback so far!

When we started this project, we originally thought of it as a weekly roundup of all the ways Web3 IS being used for good. Several weeks in, and we are thinking of it a little differently: a weekly roundup that helps change makers and innovators learn and think critically about Web3 so it CAN be used for good.

Technology, Web3 or otherwise, has no agenda. Whether it’s used for good or evil depends on who is using it and why. We hope the content that we share each week can help you contextualize how Web3 technologies can impact the world - and that whatever your role or capacity, you will act to advocate they be used in the best possible way to protect the planet and human flourishing.

This week, we are diving into Bitcoin mining; the strong response to its impact on the climate and how the response to this in developed nations can adversely impact developing nations.

What do you think? Send us a note at web3forgood@gmail.com.

Ok, let’s get right into it.

Xx Abeera & Sam

What’s Inside

📣 Latest News
📚 What We’re Reading
🚀 Opportunities
📡 On Our Radar
🌊 Deep Dive - Bitcoin Mining is Bad for the Planet. Here’s Why We Shouldn’t Ban It.

📣 Latest News

📚 What We’re Reading/Watching

Sure, some people are excited about NFTs, but this one just feels a little tone-deaf. In a town-hall meeting aimed at workers amid a massive union drive, Starbucks CEO Howard Schultz tried to use the promise of NFTs to incentivize workers.
CC0 (creative commons - no rights reserved) is the most liberal copyright licensing under which a creator or artist releases any copyright. This is a good primer on CC0 NFT Projects and the power of public domain in Web3
The Outerverse is an “anti-metaverse” NFT project that aims to promote spending more time outside. It’s the latest example of ‘move to earn’ technology being created via Web3.
If you don’t code but are interested in working in Web3, this guide is for you.
Developing countries Brazil and Indonesia led the way in crypto adoption with more than two in five (41%) respondents in each country reporting owning crypto, according to Gemini’s 2022 Global State of Crypto Report. One promising indicator from the report: among those who plan to purchase crypto for the first time this year, 47% were women globally, indicating that the crypto gender gap may be narrowing.

🚀 Opportunities

Apply: TIME Magazine is hiring for several roles supporting the TIMEPieces Web3 project.
Learn: Mint an NFT for free with Curious Addys' Interactive Tutorial.
Apply: The Giving Block is hiring a Nonprofit Channel Partner Associate (Remote).
Apply: The Celo Foundation launched its Connect the World campaign and is offering up to $20M in rewards to build on and off ramps around the world. Providers can receive $50,000 for establishing the first on and off ramp in a country. In addition, the Celo Foundation will subsidize fees up to $100K per country.
Apply: GitcoinDAO is hiring a Hiring Coordinator (Remote).

📡On Our Radar

The Bitcoin Conference took place this week in Miama in Florida, and there was a great panel on Bitcoin is Freedom where Yeonmi Park, Farida Nabourema, and Fadi Elsalameen discussed how Bitcoin can empower and bring freedom to people living under authoritarian rule.
pactDAO is fundraising 20ETH to create a sustainable mutual aid model in NYC. Funds will go to support grassroots organizations, artists, and activists (who are the leaders of this work) as well as the development of a Web3 platform to support this network.
Doin Gud has launched #DoinGud17SDGs, an initiative that gathers 17 diverse creator communities to create and curate an exhibition in support of one of the United Nations 17 Sustainable Development Goals.
ReFi DAO is a carbon sequestration cryptocurrency project dedicated to developing programs to combat Global Warming and Climate Change. It aims to “scale meaningful climate action with web3” by highlighting innovative web3 projects with a focus on climate action, and by building capacity in the space through the facilitation of conversations about ReFi.
The Regen Network offers blockchain based fintech solutions for ecological claims and data. It supports the refi ecosystem through a Community Funding grants program. Some of their offerings include tokenized carbon credits, a public ecological accounting system, and the Regen Registry, which allows land stewards to sell their ecosystem services directly to buyers around the world.
AntidoteDAO is a decentralized community focused on funding cancer research and other cancer initiatives. Their ecosystem includes a governance token and NFT collection, which both enable individuals to vote on where to allocate funds. In addition to providing funding to charities supporting cancer research and cancer patients, a core focus of the DAO is providing $100k seed fund grants to cancer research teams. Research projects are first reviewed by the DAO’s Medical Advisory team, and then put to the community for a vote.

🌊 Bitcoin Mining is Bad for the Planet. Here’s Why We Shouldn’t Ban It.

TLDR:

Bitcoin mining consumes LOTs of energy. It’s risky, unpredictable, costly, sporadically rewarding, and requires significant startup costs enter the market
Mining concentrates in countries with minimal regulations and access to cheap energy. Often this means politically unstable countries with weak institutions and easy access to dirty, non-renewable energy.
When mining concentrates in developing nations with developing infrastructure and dirty energy, the poorest suffer the most.
Developed nations with higher penetrations of renewable energy sources, should do as much as they can to incentivize miners to relocate within their jurisdictions - not ban them.
Outright bans, punitive taxation, and overly burdensome regulation will have the counterproductive effect of driving miners to developing nations with weak infrastructure, political instability, and cheap access to dirty energy. This will only increase emissions and hurt those who are most vulnerable.
The most sustainable countries to perform cryptocurrency mining are Denmark, Germany, Sweden, Switzerland, Finland, Austria, the United Kingdom, South Korea and Japan.
Mining isn’t going away anytime soon. Instead of calling for outright national bans or restrictions on cryptocurrency mining in developed countries, nations need to work together on a global, coordinated plan that will protect the most vulnerable people - and the planet - for the long run.

Last week, the 19th million Bitcoin was mined, meaning just 2 million Bitcoin remain to be extracted. Bitcoin mining isn’t going anywhere anytime soon - the rate of mining is designed to halve every four years, meaning the last Bitcoin won’t circulate until the year 2140. Still, this news has drawn new attention to cryptocurrency mining. Democratic governments in developed countries tend to be quick to condemn the industry and threaten it with regulation or an outright ban.

Cryptocurrency mining consumes vast amounts of energy. It’s risky, unpredictable, costly, sporadically rewarding, and requires significant startup costs for new players to enter the market. But Western countries shouldn’t ban it. Banning mining simply drives miners to locations with more friendly regulatory environments. Instead, policies are needed that attract miners to locations with renewable energy sources and stable economies.

What is Bitcoin Mining?

For the uninitiated, cryptocurrency mining can be a confusing concept. According to Investopedia:

“Bitcoin mining is the process by which new bitcoins are entered into circulation. Mining is performed using sophisticated hardware that solves an extremely complex computational math problem. The first computer to find the solution to the problem receives the next block of bitcoins and the process begins again.”

To mine Bitcoins, a computer or network of computers must be the first miner to generate the answer to a numeric problem in a process known as proof of work (PoW). What’s actually happening is that the computers “are trying to be the first to come up with a 64-digit hexadecimal number (a "hash") that is less than or equal to the target hash. It's basically guesswork.” The more computing power used, the more likely a computer or network is to arrive at the solution first. It’s very energy intensive.

Though some other cryptocurrencies use a less energy-intensive roof of stake (PoS) protocol to verify transactions, Bitcoiners believe that PoW is a key part of its value proposition and important for its security and decentralisation. Hence, it is unlikely that mining Bitcoin could become less energy-intensive.

The technical scope of mining is outside the scope of this piece, but if you are interested in learning more about this topic, read the full Investopedia article, here.

For now, the important thing to take away is that Bitcoin mining takes A LOT of computing power. For this reason, most mining now happens on server farms, typically large complexes in remote regions. This has become an international industry, which requires large inputs of land, power, and infrastructure.

Where in the World Does Bitcoin Mining Happen?

The Bitcoin mining industry historically has concentrated in countries with minimal regulations and abundant access to cheap energy. Oftentimes, this translates to politically unstable countries with weak institutions and easy access to dirty, non-renewable energy.

Until recently, China led the world in Bitcoin mining; when the government banned the use and mining of cryptocurrencies in late 2021, the industry mostly relocated to North America or neighboring Kazakhstan.

Kazakhstan, currently estimated to be the second largest Bitcoin production site in the world, initially encouraged this. President Kassym-Jomart Tokayev effectively legalized mining in the country in June 2020 and championed the attraction of $1.2 billion worth of crypto infrastructure investment before other countries beat them to it.

Other, smaller countries like the Republic of Georgia in the Caucasus Mountains, have attracted major Bitcoin mining operations. In Georgia, bitcoin technology company Bitfury operates a massive mining plant just outside of the capital of Tbilisi after the government offered a $10 million loan and 45 acres for $1 to attract the company, which was formerly based in San Francisco. Since then, the government has sold energy at half the rates charged in the United States or Europe.

Data from the Cambridge Center for Alternative Finance, which analyzes the power draw of Bitcoin mining by location of IP address, suggests the following locations are where mining is currently most heavily concentrated.

The common theme is: cheap energy, low regulation.

Source: Cambridge Bitcoin Electricity Consumption Index

Source: The Bitcoin Mining Network - CoinShares Research, illustrating data from Cambridge Bitcoin Electricity Consumption Index.

Bitcoin Mining and Developing Economies

Bitcoin mining is energy intensive and places enormous strain on local energy grids. When mining is incentivized to concentrate in developing nations with developing infrastructure and dirty energy, it’s the poorest who suffer the most.

Take Kazakhstan. The country’s electricity mostly comes from fossil fuels, with two-thirds of the total coming from coal. Only 1% of Kazakh energy comes from renewables. Meanwhile, the capacity of the electrical grid is limited. The country’s Ministry of Energy blames a year-on-year increase of 7% in electricity demand on the crypto mining industry alone. Official figures seem to confirm that the entire electricity demand increase (about 700 MW of power) was consumed by miners. In a developing nation like Kazakhstan, this has led to mass power blackouts and skyrocketing electricity prices. As the government struggles to cope, power has been rationed away from miners, causing many to leave the country. For those who optimistically invested large amounts to startup in the industry when the government actively encouraged it, this creates a new major economic hardship. Some reports estimate this could cost Kazakhstan’s economy up to $1.5 billion in the next five years.

In Georgia, according to Bitfury’s own calculations from 2018, it was using about 28 million kilowatt-hours of electricity per month, the equivalent of the average consumption of 120,000 Georgian households or 10% of the population, while paying significantly less per unit. Bitfury, which is registered in the Cayman Islands, made roughly $90 million in revenue in 2017 - the amount that returned to the Georgian economy is unknown due to the release of minimal financial information, though it is expected to be low. Meanwhile, a whopping 10% of the country’s total energy output was devoted to Bitcoin mining as recently as 2019. As native Georgians witness the cryptocurrency craze in their country make multimillionaires of outsiders, many have opted to make the risky decision to set up at-home mining operations. An estimated 200,000 people were running mining setups in basements and garages a few years ago, creating a new kind of strain on the energy grid. After one community in the mountainous region of Svaneti, where electricity is free, consumed so much energy attempting to mine Bitcoin last winter that “they damaged the network leaving houses with no stable electricity supply in a region where winters are harsh,” 200 residents recently gathered in a 12th century church to take an oath. On St George’s icon, they promised that they would never mine virtual currencies again.

Growing concerns about this type of exploitation and energy consumption have led to calls for a ban on Bitcoin mining entirely. However, if Bitcoin mining is banned in places that are more equipped to handle the demands of the industry, it will only serve to continue pushing miners into developing countries that lack the infrastructure to support it, meaning the poorest suffer more.

For Developed Countries, Banning is Bad

It’s a promising trend that, ever since China banned mining in late 2021, more mining operations are actively choosing to locate in North America, Canada, and Nordic Nations.

Currently, the US is the number one ranking country in terms of Bitcoin mining hashrate, driven largely by the country’s access to renewable energy, low energy prices, and pro-cryptocurrency policies. This is a good thing. In the US, the carbon footprint of crypto miners is lower because of the higher proportion of renewable energy sources.

Or in Canada, Black Rock Petroleum has agreed to host up to 1 million Bitcoin-mining machines from China and power all directly from natural gas. This is also a good incentive.

Though fossil-fuel subsidies are not non-existent in developed countries, they are much smaller than in developing countries where coal, oil, and gas are heavily subsidized by the state. Keeping this in mind, nations with higher penetrations of renewable energy sources, should do as much as they can to incentivize miners to relocate within their jurisdictions - not ban them.

Outright bans, punitive taxation, and overly burdensome regulation, though tempting for those who are unhappy with mining’s overall energy consumption, will have the counterproductive effect of driving miners to developing nations with weak infrastructure, political instability, and cheap access to dirty energy. This will only increase emissions and hurt those who are most vulnerable.

So where should Bitcoin mining ideally happen?

According to a July 2021 study published in Energies, which used the Environmental Performance Index (EPI) and several determinants of cryptocurrency mining, the most sustainable countries to perform cryptocurrency mining are Denmark and Germany. Of the top ten countries eight of them are European (Denmark, Germany, Sweden, Switzerland, Finland, Austria, and the United Kingdom). The remaining two are Asian (South Korea and Japan).

Sustainable cryptocurrency mining, the report notes, will only be possible if mining moves from countries that score poorly (such as Venezuela, Libya, Iran, or Malaysia) to countries where mining will have a lower impact on the environment and local economic development.

When Bitcoin mining concentrates in developing nations, this impedes these nations from achieving their national determined greenhouse gas emission contribution goals and only adversely affects the communities already most vulnerable to global warming and economic hardship.

Whatever your opinion on cryptocurrency, mining isn’t going away anytime soon. Instead of calling for outright national bans or restrictions on cryptocurrency mining in developed countries, let’s work together on a global, coordinated plan that will protect the most vulnerable people - and the planet - for the long run.

🌍 This Week in Web3forGood

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