Introducing Gemini Green: Offsetting Bitcoin Carbon Emissions

Today, we are thrilled to announce Gemini Green, a long-term initiative to incorporate climate-conscious practices into our business. We’re on a mission to empower the individual through crypto, and we want to make sure we do so in a sustainable way.

Gemini Green’s initial focus is the energy consumption of the Bitcoin Network, namely the energy used by miners to secure the network. Many miners use renewable energy sources, which emit no carbon dioxide into the atmosphere; however, some miners do not. In an effort to offset the latter, we used reputable data sources to determine the annualized carbon footprint of the Bitcoin Network and then estimated Gemini's usage of the Bitcoin Network to understand our exposure to non-renewable mining. With this information, we have collaborated with Climate Vault, a non-profit organization founded by the University of Chicago, to purchase carbon permits to offset our exposure for the first half of this year. And we plan to continue to do so into the future. We discuss our results, methodology, and implementation below.

Result

We have spent $4,031,767.35 to purchase carbon permits to offset the carbon emissions related to Gemini’s usage of the Bitcoin Network from January 1 to June 30, 2021. These carbon permits will prevent 341,965 metric tons of carbon from entering the atmosphere — the equivalent of nearly a billion miles driven by a typical passenger car.

Methodology

The Bitcoin Network’s energy consumption is a result of miners competing for the bitcoin block reward. This competition involves a computationally-intensive, proof of work (PoW) puzzle, whereby the “winning” miner is rewarded with a set number of bitcoin roughly every 10 minutes. This competition secures the Bitcoin blockchain and continues regardless of whether or not there are any transactions on the Bitcoin Network. Therefore, we define our “usage” of the Bitcoin Network as the portion of the mining process that we benefit from, or rather, the amount of energy consumed by miners to secure the bitcoin that Gemini 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.

As a result, we calculated the amount of bitcoin we custody as a percentage of the circulating supply of bitcoin to determine our usage of the Bitcoin Network and then applied this percentage to the Bitcoin Network’s total energy consumption to estimate the energy consumption related to our usage. We then offset the energy consumption related to our usage that we estimate to involve non-renewable mining. ³

Step 1: Calculate Gemini’s usage of the Bitcoin Network.

      Gemini’s average daily bitcoin balance / Average daily bitcoin in circulation ¹       = Gemini’s usage of the Bitcoin Network

      250,843 BTC / 18,660,225 BTC = 1.34%

Step 2: Calculate the energy consumed by miners related to Gemini’s usage of the Bitcoin Network (2021 YTD).

      Gemini’s usage of the Bitcoin Network x the Bitcoin Network’s average       annualized energy consumption ² = energy consumed by miners related       to Gemini’s usage of the Bitcoin Network

      1.34% x 106.6913 tWh = 1.434215 tWh

Step 3: Calculate the carbon intensity of the energy used by the Bitcoin Network. “Carbon intensity” is defined as the amount of carbon emitted per unit of energy consumed.

      Annualized carbon footprint of the Bitcoin Network ³ / Projected annual       energy usage of Bitcoin network = carbon intensity of the energy used by       the Bitcoin Network ³

      60.40 Mt CO2 / 126.66 tWh = 476,867.20 mT CO2 / tWh

Step 4: Calculate the carbon emissions related to Gemini’s usage of the Bitcoin Network.

      (Energy consumed by miners related to Gemini’s usage of the Bitcoin       Network x carbon intensity of the Bitcoin Network) x (days/year) =       Carbon emissions related to Gemini’s usage of the Bitcoin Network

      (1.434215 tWh x 476,867.20 mT CO2 / tWh) x (182.5/365) = 341,965 mT       CO2

Step 5: Calculate the cost to offset the carbon emissions related to Gemini’s usage of the Bitcoin Network.

      Carbon emissions related to Gemini’s usage of the Bitcoin Network x cost       per permit to emit 1 mT CO2 = cost to offset the carbon emissions related       to Gemini’s usage of the Bitcoin Network

      341,965 mT CO2 x $11.79 per permit / 1 mT CO2 = $4,031,767.35

^{1 Bitcoin Blockchain (source: Blockchair)
2 We used publicly available data from the Cambridge Bitcoin Electricity Consumption Index and the Digiconomist Bitcoin Energy Consumption Index to determine Bitcoin’s average annualized electricity consumption.
3 We used the data and methodology of the Digiconomist Bitcoin Energy Consumption Index to estimate a carbon intensity coefficient (“Carbon Footprint” and “Estimated TWh per Year”, both as of June 8, 2021).}

Implementation

Gemini Green has teamed up with Climate Vault to offset our carbon emissions. Climate Vault engages directly with government-regulated cap-and-trade markets to buy carbon permits and remove them from circulation by “vaulting” them, which prevents other market participants from using them to emit CO2 and reduces the overall supply of carbon permits, making it more expensive for businesses to pollute. Climate Vault also supports the development of cutting-edge carbon capture and sequestration technologies, further accelerating the removal of carbon from the atmosphere.

Looking Ahead

In addition to purchasing offsets, we have allocated $1 million through the Gemini Opportunity Fund to support companies, projects, and nonprofits that are focused on sustainability in the crypto industry. If you are working on a sustainability initiative, we want to hear from you. You can reach out to us at opportunityfund@gemini.com.

Crypto promises greater choice, independence, and opportunity for all. As a global company, we are committed to raising the bar for environmental stewardship across the entire crypto industry so that we can usher in this revolutionary technology and movement in a sustainable way. If you’d like to learn more about partnering with Gemini Green, you can reach out to us at green@gemini.com.

We are proud to be the first crypto platform in the world to offset our carbon emissions.

Onward and Upward!

Tyler and Cameron Winklevoss