IBM, Veridium Labs to Launch Environmental Token
Veridium will tokenize carbon credits on IBM’s blockchain.
US technological company IBM Corp. will provide its blockchain technology to environmental fintech startup Veridium Labs Ltd. for a carbon credit-backed token, IBM said on Tuesday.
The idea behind the collaboration is to transform the carbon credit market and make it easier for companies to compensate for their carbon footprint. Тhe two companies will partner to sell Veridium-issued VERDE (VRD) tokens for carbon credits on the public blockchain of Stellar, a San Francisco-based startup IBM is also working with.
The proceeds from the token sales will be used for the reforestation of a 250-square-mile rainforest reserve of Rimba Raya in the Indonesian part of the island of Borneo.
What are carbon credits?
Carbon credits are instruments whose purpose is to offset environmental pollution. Each carbon credit represents one tonne of carbon dioxide or other greenhouse gases that has not been emitted. Since carbon credits are tradable tools, a company which has exceeded its capped limit of emissions can buy additional credits from a company which has not reached its limit in order to avoid sanctions.
Although purchasing credits from third parties is a common practice, the process of measuring the emissions can be confusing and costly, Veridium said adding that the process of purchasing of credits is no less complicated.
Therefore, the fintech firm decided to turn carbon credits into exchangeable digital assets that can be traded and redeemed on the Stellar blockchain network. In this way, the venture seeks to simplify carbon accounting and offsetting and to reduce costs, Veridium CEO Todd Lemons explained.
Are cryptocurrencies eco-friendly?
With the issuance of the VRD coin, IBM and Veridium aim to help enterprises offset their carbon footprint. But controversies about tokens and cryptocurrencies often involve environmental concerns connected with the large amounts of energy needed by cryptocurrency mines to mint new coins. The process is highly energy-consuming, since it is driven by thousands of servers at the same time.
Data by Digiconomist shows that the estimated annual electricity use of Bitcoin (BTC) mining was 64.2 TWh on May 1, against 11.5 TWh a year earlier. In Iceland, for example, the electricity demand of BTC data centers might exceed that of all households on the island, a spokesman of local energy firm HS Orka told the BBC in February.
A wide number of companies have turned to green energy for their mining operations. One example is US tech firm Bitfury which decided to build an energy-efficient mining center in Norway. US-based group NastyMining is another one to utilize 100% sustainable resources (solar and wind power in this case).
Going back to IBM and Veridium’s partnership on the tokenization of carbon credits, neither of the players disclosed what kind of energy will be used to mine the VRD token.
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