BitMEX is making headlines for its pledge to become carbon neutral. Once realized, it would be the first cryptocurrency exchange to be completely carbon neutral. The Seychelles-based derivatives exchange is gaining praise for its decision from different sectors. However, there is a catch in their chosen method of becoming carbon neutral.
To realize their dream of having zero net carbon emission, BitMEX would be buying $100,000 worth of carbon credits, which amounts to 7,110 metric tons of carbon dioxide emissions. That would be the amount of carbon emission BitMEX projects for itself as it keeps continuing its carbon-intensive business. While it looks like a great initiative on paper, there are some underlying flaws with the way carbon credits operate. To put it in a nutshell, carbon credits are fraught with corporate corruption. Many even feel that it does very little n terms of actual work, and instead makes a market of people’s good intentions.
The problem with such carbon offset plans is that they do not provide any real mechanism for reducing carbon emissions. Instead, they transfer one company’s carbon emissions to another. For instance, if X company released 1 metric ton of carbon and Y released 9, their total would be ten metric tons. What Y does in buying carbon credit is taking up the 4 used metric tons from X, and hence can claim a reduction of 4 metric tons in carbon emission.
It is a good idea on paper, but there are doubts about how effective it is to buy carbon credits. In a way, such schemes force crypto-exchanges to buy these corporate services to share collective guilt. In reality, that would just delay their operations and force them to allocate funds elsewhere, while having a very little positive environmental impact.