What connection does FTX have to the environmental impacts of crypto?
This is a hard question to answer. Clearly we operate within the crypto world and are connected to it, but what do we specifically do that has a negative environmental impact? Once someone deposits crypto to FTX it's held in our wallets, it doesn't move around if one client trades it to another. We do however send crypto withdrawals and one of our advantages is that we even pay for the cost of this withdrawal for all Proof-of-Stake currencies. If the token is on the Ethereum blockchain or a small Bitcoin withdrawal, we share the cost of the withdrawal with the user.Currently over 80% of deposits and withdrawals on FTX use low-cost, carbon-efficient Proof of Stake blockchains which massively reduce the climate impact of blockchains.
Even for the remaining <20% we aren't using significant amounts of electricity to send the withdrawals, but we are paying part of the fee which incentivises the companies that do. We think it would be reasonable for us to be partially responsible for these environmental impacts. This feeling of responsibility is what led us to start FTX Climate and why we are excited to continue spending millions of dollars to make FTX existing extremely positive for the environment, regardless of what other companies do.
Is Proof-of-Work bad?
Proof-of-Work blockchains use significant amounts of energy. If this electricity is generated from high carbon sources then it can be directly linked to large amounts of carbon output.
The first consideration is to decide if this energy was coming from renewable sources, would you still consider this bad? For example if a Bitcoin mining company went and bought hundreds of millions of dollars worth of solar panels, and used that electricity for mining Bitcoin, is that bad for the environment? It is likely slightly worse than if they did nothing at the first level, but what is the actual environmental impacts of that? The production of the mining equipment and the solar panels is what we can come up with. However when you weigh the longer term value of adding hundreds of millions of dollars in demand for solar panels it becomes less obvious if this is net negative or net positive for the environment long term.
If your answer is no, or maybe but not at a scale that matters, then the discussion has gone from 'Proof-of-Work is bad for the environment' to 'high carbon energy generation is bad for the environment' - a point we fully agree on.
The next question we think about is the value of cryptocurrencies themselves. If you value what these Proof-of-Work blockchains add to the world as 0, then any negative environmental impacts would make the cost outweigh the benefits.
However we don't try to value a thing that people care about. At least we wouldn't try to value it without also critically valuing every source of energy usage like heating your home, building a road, or sending an email. We 100% support efforts to reduce the environmental costs of these activities but we wouldn't say 'you don't need this house at all'. Within the crypto community people value the ability to store and send as much wealth as they want, the ability to protect against inflationary states eroding their retirement savings, or if they simply have strong opinions on the Proof-of-Work vs Proof-of-Stake debate. We view the really important points of this discussion to be where the electricity is coming from if you use Proof-of-Work, and if you think Proof-of-Stake can also add the same value for near zero environmental costs.