We didn't want our customers to have to choose between carbon and crypto, so we decided to offset 100% of the carbon emissions caused by our Carbon Neutral Crypto Fund.
We have done it with the help of technology, research, and a lot of cow poo.
Read on to find out more...
How it works?
Our Carbon Neutral Cryptocurrency fund is innovative not just because it is the first single KiwiSaver fund to offer investment in crypto. It also manages to be carbon neutral through a carbon offset scheme Carbon Check (India) Private Ltd.
Carbon offsets are an important part of the design of our crypto fund. While we believe cryptocurrency has a great use case for the future, one of our main concerns is its excessive energy use, which causes carbon emissions.
We didn’t want kōura customers to have to choose between crypto and carbon, so we decided to make our fund carbon neutral.
To do this, we will annually purchase carbon offsets from a scheme in India that gives households equipment to turn cow poo and other organic material into methane gas, that can be used for cooking, heating, and fertilizer. This protects the atmosphere from methane and helps families in India meet their cooking needs and purchase necessities.
We used research from globally recognized firms Digiconomist and Cambridge Energy Electricity Consumption Index to calculate how much carbon our Bitcoin fund was responsible for creating during the year, so we could offset it.
We did this at our own expense, investors in the fund are not charged for these carbon offsets.
How does crypto create carbon?
Crypto currencies are forms of currencies that exist digitally and use advanced cryptography to secure individual transactions.
Unlike traditional currencies, crypto currencies are controlled by users and do not have a central regulatory or issuing body. Transactions are “validated” by a network of users.
But this validation process is energy intensive and results in a very high carbon cost.
Bitcoin, (which we invest in through the Carbon Neutral Crypto fund) is subject to these kinds of emissions.
How we calculated our carbon emissions?
To figure out how much carbon emissions our fund is responsible for we relied on research from two separate agencies.
The first was Digiconomist, a company that analyses the energy consumption and carbon footprint associated with cryptocurrencies, particularly Bitcoin, highlighting their environmental impact.
Digiconomist works out Bitcoin's carbon emissions by considering the energy consumption of the entire Bitcoin network and using average emission factors based on the electricity sources used for mining.
The second agency was Cambridge Energy Electricity Consumption Index, a measure that tracks the electricity consumption of the entire Bitcoin network.
The Cambridge Energy Electricity Consumption Index, estimates Bitcoin's carbon emissions by using global electricity consumption data and adjusting it based on the percentage of renewable energy sources used for mining.
As these two companies calculate emissions in slightly different ways, they come up with a slightly different figure for Bitcoin emissions.
Digiconomist figures show carbon emissions to be 53.42 Mt (Megatonne) of C02 (carbon dioxide) per Bitcoin.
CECI figures show carbon emissions to be 66.65 Mt of C02 per Bitcoin.
To make sure we covered the research of both companies we averaged out these two figures to come up with an average of 60.0 Mt of C02 total across the entire Bitcoin network.
Spread across 19 million Bitcoin tokens currently on issue, that means each Bitcoin is responsible for 3.1 tonnes of carbon.
Based on our fund size and the Bitcoin price, we owned on average 14.3 Bitcoin through 2023. This means, we are responsible for offsetting 45 tonnes of carbon.
We are confident our research allows us to know just how many carbon emissions our fund is responsible for and are able to offset the emissions of our fund.
How will we offset? Cow poo and innovation!
The initiative we have partnered with tackles methane emissions in rural areas of Maharashtra, India. By replacing wood-burning stoves with biodigesters, cow dung and human waste are converted into cleaner, sustainable methane fuel.
With 70% of rural households in this area relying on firewood, this transition reduces forest cutting and addresses land degradation issues. Forests turning into open scrub exacerbate desertification problems.
Biodigesters utilize anaerobic microorganisms to break down cow dung, producing methane gas for cooking. Sizing the biodigester based on family size and cattle ownership ensures sufficient fuel supply. Without biodigesters, methane emissions would increase, further degrading forests and exacerbating environmental challenges.
By purchasing these carbon offsets, we're able to neutralize the carbon emissions created by our Crypto fund's mining process. This allows our investors to invest in cryptocurrency with the knowledge that they're also making a positive impact on the environment.
We understand that investing in cryptocurrency can be a risky proposition, and we always encourage our investors to do their own research and consult with a financial advisor before making any investment decisions.
Bitcoin is a highly volatile asset and historically has experienced significant value swings (+100% or – 50%) over short periods of time. There is no guarantee that assets will recover after a significant fall or that historical returns will continue. The volatile nature of the asset may result in the value of the fund falling significantly in value or even going to zero. Investors will be significantly disadvantaged if they need to withdraw funds during a Bitcoin downturn.
The majority of crypto currencies exist outside of the traditional regulatory environment. The lack of regulation and ability to hide transactions has meant that crypto currencies have and are being used by criminals to launder and transfer the proceeds of crime around the world. Some countries have banned their citizens from investing in or using crypto currencies as a result of these concerns. Some financial institutions refuse to interact with companies or individuals who operate in the crypto currency space due to Money Laundering concerns.
There is a risk that crypto currencies become subject to increased regulation or financial institutions refuse to process transactions that originate from crypto currencies. This will result in the value of cryptocurrencies falling due to investors being unable to convert their currencies into traditional currencies.
However, with our partnership with Cool Effect, investors can invest in our Crypto fund with the knowledge that they're also supporting a great cause.
