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Posted on Oct 21st, 2021

Carbon Neutral Cryptocurrency: How Does it Work?

The rise of cryptocurrencies has coincided with the era where ESG movement has gained significant support. This has put cryptocurrencies, particularly Bitcoin and Ether, in the limelight due to concerns around carbon emissions resulting from high energy consumption. While the debate continues, we have partnered with Patch to measure and offset the carbon footprint of our portfolio so you can invest in Bitcoin or Ether without worrying about the environmental impact. Here is how we do it:

Step 1: Calculate Average Efficiency of Mining Equipment

This number represents the amount of energy mining equipment use to generate a given amount of output (hash rate).

E.g. 0.1 Joules per Gigahash

Step 2: Calculate Daily Energy Usage

We use the efficiency value from Step 1 and multiply with daily hash rate of the network to calculate total energy usage.

Step 3: Calculate the Weighted Average Emissions Factor

For this calculation, we answer two questions:

1) What is the distribution of mining activity?

  • Country A: 40%
  • Country B: 60%

2) What is the carbon footprint of each country?

  • Country A: 10 tonnes of CO2 per MWh
  • Country B: 5 tonnes of CO2 per MWh

Then we take the weighted average.

Step 4: Calculate Network’s Carbon Footprint

Once we know the energy usage of the network and how much carbon is emitted for that usage, we multiply them.

Step 5: Map Network Level Daily Emissions to Our Holdings

We allocate carbon emissions to our portfolio based on our daily holdings as a percentage of total supply.

  • E.g. Holding 1% of total supply means we are responsible for 1% of the carbon emissions of the network.

Step 6: Offset Carbon Emissions

We buy and expire carbon offsets for our share of emissions.

Read the full methodology on how we measure and calculate our missions achieving carbon neutrality.

The content of this document is for informational purposes only, and is not being provided in the context of an offering of any securities described herein, nor is it a recommendation or solicitation to buy, hold or sell any security. The information is not investment advice, nor is it tailored to the needs or circumstances of any investor. Information contained on this document is not, and under no circumstances is it to be construed as, an offering memorandum, prospectus, advertisement or public offering of securities. No securities commission or similar regulatory authority has reviewed this document and any representation to the contrary is an offence. Information contained in this document is believed to be accurate and reliable, however, we cannot guarantee that it is complete or current at all times. The information provided is subject to change without notice and neither Purpose Investments Inc. nor is affiliates will be held liable for inaccuracies in the information presented.

This information has been compiled by representatives for Purpose Investments Inc., an investment fund management firm. The information contained in this document was obtained from sources believed to be reliable; however, Purpose cannot guarantee that it is accurate or complete. This material is for informational and educational purposes and it is not intended to provide specific advice including, without limitation, investment, financial, tax or similar matters.

Certain statements in this document are forward-looking. Forward-looking statements (“FLS”) are statements that are predictive in nature, depend on or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” intend,” “plan,” “believe,” “estimate” or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS. FLS are not guarantees of future performance and are by their nature based on numerous assumptions. Although the FLS contained in this document are based upon what Purpose Investments and the portfolio manager believe to be reasonable assumptions, Purpose Investments and the portfolio manager cannot assure that actual results will be consistent with these FLS. The reader is cautioned to consider the FLS carefully and not to place undue reliance on the FLS. Unless required by applicable law, it is not undertaken, and specifically disclaimed, that there is any intention or obligation to update or revise FLS, whether as a result of new information, future events or otherwise.