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  • Makoto Shibuya

Forest for the Trees

As architects, we spend a lot of time thinking about the carbon footprint of our infrastructure. However, our monetary system is upstream of almost everything in our economy, and we don't often think about the carbon footprint of our money. Like a business, our money has the equivalent of scope 1,2 and 3 emissions.


Our money also has direct, indirect, upstream, and downstream emissions. For the same reason we calculate carbon emissions from commuting to and from our buildings, what if we consider emissions from behavior resulting from different forms of money? Whether we realize it or not, our monetary policy influences (among other things) how much, for what duration, and with what materials we build. What kind of behavior does it encourage? Does it encourage short or long time preference behavior?


I began to think beyond our infrastructure to understand the carbon footprint of our entire incentive structure. Despite our good intentions as architects, I wondered if we were missing the forest for the trees.


How do we achieve a carbon-neutral monetary system?


The Bitcoin network has a unique property—the inelastic nature of the block reward—that could help make it carbon-neutral if one mines the same percentage of one's holding using renewable energy.


If one co-invests in Green Co-investment Instruments (GCIs) in proportion to the size and duration of one’s bitcoin holdings, one’s bitcoin and green mining investments together will produce no net incentive to mine bitcoin in a carbon-intensive way. Troy Cross and Andrew Bailey

In other words, holding carbon-neutral bitcoin is possible. The network is backed by energy, so the transition to renewable energy sources reduces the network's carbon footprint.

Furthermore, as the marginal cost of renewable energy approaches zero, we will see an increase in hash rate from renewable energy that will gradually "squeeze out" fossil fuels, thereby achieving a carbon-neutral (and eventually carbon-negative) network over time.


A Bitcoin standard would also induce lower time preference behavior congruent with our environment.














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