In brief
- Winklevoss-led Gemini is working toward incorporating environmentally friendly practices into its business model.
- The exchange has invested $4 million in carbon permits.
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Amid growing concerns about the damaging environmental impact of Bitcoin mining, crypto exchange Gemini has launched “Gemini Green,” a new long-term initiative to offset the carbon emissions created by the cryptocurrency in the exchange’s custody.
To accomplish the goal, Gemini has partnered with Climate Vault, a non-profit organization run by the University of Chicago. In an announcement on Thursday, the exchange said it has purchased over $4 million in carbon permits to offset the carbon emissions from using the Bitcoin network between January 1 to June 30 this year.
A carbon permit, sometimes called a carbon credit, is sort of like a hall pass that lets companies emit a certain amount of greenhouse gases into the atmosphere. The more a company pollutes, the more credits it needs to offset these emissions. This also creates an incentive to reduce emissions. If a company produces fewer greenhouse gases than its allotted permits allow, it can resell the permits for a profit.
By launching its climate-conscious initiative, Gemini follows in the footsteps of other major crypto exchanges, such as BitMEX and FTX, who both began offsetting carbon emissions last month.
When defining the term “usage,” Gemini describes it as “the portion of the mining process that we benefit from,” or, in other words, the amount of energy consumed by miners to secure the cryptocurrency it custodies.
“We believe that this custody-based approach more accurately reflects Gemini’s usage of the Bitcoin Network as opposed to a transaction-based approach, which ignores the fact that Bitcoin at rest are secured by the mining process,” the exchange said.
According to Gemini, its average daily Bitcoin balance this year is 250,843 BTC or more than $8.4 billion in today’s prices. The exchange estimates that it uses 1.43% of the Bitcoin network.
The $4 million that Gemini donated to Climate Vault in exchange for carbon permits are supposed to prevent more than 340,000 metric tons of carbon from entering the atmosphere, or “the equivalent of nearly a billion miles driven by a typical passenger car.”
In addition, Gemini said it will support companies, projects, and non-profits focused on bringing more sustainability to the crypto industry. This part of the initiative has seen the New York-based exchange allocate $1 million to the Gemini Opportunity Fund, a donor-based fund initially established to support Bitcoin Core developers.
Gemini also stressed its commitment “to raising the bar for environmental stewardship across the entire crypto industry,” adding that it plans to allocate more funds to further offset the non-renewable energy consumed by Bitcoin miners.