The government has handed funding to a startup in a new push to decarbonise cryptocurrencies, opening the door to similar projects getting grants in future.
Edinburgh-based Zumo said it had recently completed a project where it bought renewable energy certificates to make up for £1.5m in bitcoin purchases on its app, estimated to compensate for 850-megawatt hours of electricity usage.
Now, it has been given £50,000 of phase one funding by Innovate UK, the government’s innovation agency, for the next stage of its project. This allows it to apply for phase two funding, which could be worth as much as £1m.
The crypto industry has come under fire in recent years for being too energy intensive. Bitcoin alone consumes 131 terawatt-hours annually, according to a 2022 estimate by the Cambridge Centre for Alternative Finance, ranking it between Ukraine and Egypt in terms of electricity consumption. Cost per bitcoin mined ranges from $4,500 to $16,000 across the industry.
The figures have raised questions about how to decarbonise the industry, mainly by seeking green energy sources for crypto mining, the process by which tokens are generated.
Zumo said a poll of its customers found that 84% felt sustainability in the industry was a topic companies should be working urgently to address.
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The grant will help Zumo pay for a new project called RenewableCrypto. Zumo says it will work with tech startup Zero Labs on scaling up the use of renewable energy for crypto wallets and trading platforms.
Doug Miller, co-founder of Zero Labs, said he hoped the project would help “convert the wider crypto industry into a newfound source of demand for clean energy in voluntary markets”.
Kirsteen Harrison, environmental and sustainability adviser at Zumo, added: “With electricity being the most significant part of crypto’s carbon footprint, we have a unique opportunity as a sector to rapidly decarbonise.”
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