Binance Australia has become the world’s first digital currency exchange to sign on to the World Economic Forum’s environmental, social and governance framework, in a bid to turn the tide on crypto’s reputation for being a boys club with a massive carbon footprint.
On Thursday, Binance Australia announced that it will begin reporting on a range of ESG metrics from governance and anti-corruption practices, to ethical behaviour, human rights, carbon emissions, diversity and inclusion, pay equality, and even the amount of tax it pays.
The reports will be distributed directly to more than 700,000 of the exchanges users, and will be made available on a public ledger, every quarter, using Socialsuite’s “ESG Go” technology, which will both monitor and report on the exchange’s performance.
Leigh Travers, chief executive at Binance Australia, told Business Insider Australia that he hopes the move will prompt similar efforts among the exchange’s competitors to try and flip negative perceptions of the industry.
“One of the biggest headwinds the digital asset industry has faced is negative commentary and misinformation based on carbon emissions from the sector,” Travers said.
“The industry is led by people and organisations determined to have a positive impact on society and the negative headlines has triggered a lack of education and awareness of ESG-conscious crypto businesses.”
It’s a tricky topic. According to the Cambridge Bitcoin Electricity Consumption Index, the process of mining Bitcoin alone inhales about 91 terawatt-hours of electricity annually. That’s more power than is consumed by Finland’s entire population.
There’s also a broadly overlooked e-waste element to crypto’s monolithic carbon footprint. Mining Bitcoin, and a range of other coins, requires specialised hardware — like Application-Specific Integrated Circuits — that either burns out or quickly becomes obsolete.
The raging hardware churn demanded by Bitcoin alone is estimated to produce about 11.5 kilotons of e-waste every year.
On the other hand, cryptocurrencies that run on “proof-of-stake” (PoS) blockchains don’t require mining at all, and therefore require far less energy. Unsurprisingly, they’ve become the cause du jour.
The developers building networks with hopes of offering the world material utility, like much of Web3 and the metaverse by proxy, have recognised that their projects can only deliver on their promise if there’s still a world to live in.
As a result, Etherum recently announced that it would switch to PoS infrastructure next year, which will result in roughly 99% less energy intake, and produce less carbon exhaust. Others like EOS and Cardano, meanwhile, have been operating on the infrastructure for years.
Keeping crypto sustainable is something that Binance Australia is trying to lead the entire market on. That means neutralising all crypto carbon activity, not just the infrastructure through which the asset class travels.
The exchange doesn’t yet have a concrete net zero commitment, but Travers hopes he can bring one to the market soon. Until then, he said, his team will spend $1 million planting trees in Australia, and is committed to limiting its already “relatively small” carbon footprint.
“The main priority here isn’t net zero,” Travers said. “We are a fintech company with less than 50 employees, so our carbon footprint is relatively small, especially when we look at traditional finance — but there’s still a misconception about the industry.”
“A lot of this was triggered by Elon Musk’s comments earlier this year about the environmental impact of Bitcoin, which shook the market severely and ignited a lot of misinformation.”
In May, Musk tweeted out a statement announcing that Tesla would no longer accept Bitcoin as payment for its cars, because of the “great cost” borne by the environment. The price of Bitcoin fell about 5% in the minutes that followed.
Travers said investors and speculators only need to look at the moves made in tandem with Ethereum to recognise that change is afoot.
“Generally, the people pushing the crypto agenda forward are the types of people who are happy to see positive change,” Travers said.
“They don’t want things to stay the same just because. We can also see the movement to change the conversation with the Bitcoin Mining Council, pioneered by Michael Saylor,” he said.
“This year is about creating a baseline, addressing concerns and then raising awareness of how the industry is changing.”
In the meantime, the focus at Binance will be on planting lots of trees, diversifying its workforce, and building out a governance solution to manage the trading of digital assets within the Binance Australia team, to ensure they’re compliant with internal trading policies.
“The financial and tech sectors have a bad reputation for being male dominated. But we are pushing for diversity when hiring,” Travers said.
“Out of our five most recent senior hires, three were amazing women,” he said.
“We absolutely urge our industry peers to engage in this conversation, whether they’re other exchanges, platforms, or miners. It’s incredibly important we band together as an industry.”