Frequently Asked Questions
Bitcoin is the leading digital asset known for its security, decentralization, scarcity, and immutability. It offers an alternative to the traditional financial system and serves as a highly compelling store of value. Sustainable Bitcoin Protocol recognizes that Bitcoin, as a groundbreaking financial and technological innovation, has the potential to democratize access to financial systems, reduce costs, and be used as an absolute store of value. However, Bitcoin's energy-intensive Proof of Work (PoW), while undoubtedly the most secure and decentralized consensus algorithm, has raised environmental concerns. By addressing these concerns through a framework intended to incentivize transparent clean energy use, Bitcoin has a unique opportunity unlike any asset before it to help rapidly accelerate the clean energy transition.
Proof of Work and Proof of Stake are blockchain consensus mechanisms with critical differences. Bitcoin's PoW requires significant energy to establish a physical world connection, ensuring superior security and fairness over PoS, which is less energy-intensive. While shifting Bitcoin from PoW to PoS is technically infeasible, Sustainable Bitcoin Protocol (SBP) also sees PoW not as a hurdle but as a catalyst for the clean energy transition.
Bitcoin mining is a flexible, location-agnostic, and interruptible buyer of electricity that is highly sensitive to price. This is what gives Bitcoin mining the ability to support grid resilience through demand response, tackle methane emissions, and bring otherwise stranded clean energy to communities. Rather than move to PoS, investors, miners, and environmentalists should harness this technology to accelerate the energy transition.
The Sustainable Bitcoin Protocol (SBP) is an environmentally friendly commodity tailored for Bitcoin. It is designed to incentivize Bitcoin miners to use verified clean energy while allowing investors to possess BTC in a manner that is verifiably beneficial for the climate, without compromising Bitcoin's fungibility.
SBCs are created only when one of two measured positive environmental impacts occur:
- Bitcoin mining with verified clean energy: For every Bitcoin or Satoshi mined with verified clean energy, one SBC or Kyoto is issued, down to 8 decimal places.
- Capital is mobilized into renewable energy markets through the purchase and retirement of high-quality EACs or RECs on behalf of the historical energy consumption of the Bitcoin network. The quantity of clean energy purchased is determined by the average energy consumption of the network on a per-bitcoin basis, and this benchmark is developed in collaboration with leading institutions. This approach ensures that we over-invest to address the historical energy consumption of the Bitcoin network, thereby driving it to climate positivity as more miners and investors adopt the protocol.
Auditing ensures accuracy and credibility for a miner's clean energy consumption. The protocol’s methodology is divided broadly into two parts:
Data Matching on our Platform
The foundational and initial layer of verification provides a comprehensive understanding of a miner's energy sourcing and ensures that each BitREC genuinely reflects clean energy attributes.
- Collect data on miners’ energy consumption by connecting to existing mining infrastructure, including fleet management software or hardware-level data
- Match energy data with proof of clean energy consumption through EACs and other methods
- Use cutting-edge MRV solutions to ensure sustainable practices and emissions reductions in methane mining
Third-Party Auditing Services
The Protocol is auditor-agnostic; we partner with reputable third-party auditors with high-quality data and expertise in energy and emissions verification.
What standards must miners adhere to? We believe credibility matters most, which can be achieved by aligning with the most widely-accepted frameworks like Greenhouse Gas Protocol and RE100, data transparency, and partnerships with leading auditing and data organizations.
What if a miner uses stranded or waste methane gas? Is this sustainable? For stranded and waste gas mining, we have a proprietary standard designed by the protocol in collaboration with thought leaders in the natural gas and sustainability space. This framework ensures that the methane mitigation practices from miners are supporting the clean energy transition and not further incentivizing the growth of fossil fuels.
For more information about miner requirements, see the Sustainable Bitcoin Protocol (SBP) Whitepaper
Yes, every BTC that exists from the genesis block to the block being mined right this second shares the same carbon footprint because all BTC derive their value from the ongoing security of the network. Therefore, when we issue an Sustainable Bitcoin Protocol (SBP) to a miner, the protocol does not say “The BTC you just mined is sustainable” because the miner just added some security to the overall network and happened to win the block (or part of a block via a pool).
We issue SBCs to miners strictly as an incentive to transparently use verified clean energy. In addition to incentivizing transparency and clean energy use, SBCs addresses the Bitcoin network's past and future environmental footprint to create a “climate-positive asset”. Bitcoin is unique in that it’s a commodity derived from a network and therefore has unparalleled sustainability potential, which is why we are convinced that Bitcoin plus SBC is the ultimate climate-positive asset. Sustainable Bitcoin Protocol (SBP) is a bridge between Bitcoin and the tens of trillions of climate capital that seeks opportunities to invest in and accelerate the clean energy transition.
We are continuously building to integrate with various software, hardware, firmware, and pools.
The SBCs is a market-based asset. Its intrinsic value can be calculated based on the current market rates for EACs and the current energy demands of the Bitcoin network. The intrinsic SBCs price is published on our website, which provides real-time pricing information. The market price will be displayed once there is a consistent price feed.
The intrinsic value of an SBCs is calculated based on the differential in energy costs to mine a single Bitcoin with grid energy alone versus using grid energy combined with EACs, such as Renewable Energy Certificates (RECs). For example, if the average energy consumption required to mine one Bitcoin is 500 MWh, and the cost of 1 MWh of RECs is $3, the SBCs would be priced as follows:
SBC Price = (Average MWh to Mine One Bitcoin × Cost of 1 MWh of RECs) × (1+Margin)
SBC = (500 x $3) x (1 + 0.15 (margin)) = $1,725
Key Variables Influencing SBCs Pricing
- Daily Average Energy Consumption for Mining One Bitcoin: The energy requirements fluctuate daily based on the network’s hash rate. Price of High-Quality RECs: We use a benchmark of $3.00, but the current market range is between $2.75 and $3.75.
- Supply Dynamics: The supply of SBCs, either from Bitcoin miners or minted from clean energy financing, also impacts the SBC price.
Whereas carbon credits can be issued without proof of a reduction in emissions and whose value is written down to zero once retired, the SBC is a store of value that represents the production of 1 sustainably-mined BTC and is fully data-backed.
The rationale for aligning SBC issuance with the current hash rate is multifaceted. It aligns well with our mission to maintain a transparent, fair, and economically viable market for SBCs.
Connecting Bitcoin Mining to the Clean Energy Markets
By pegging SBC creation to the current hash rate’s energy consumption, we ensure that the price of the SBC matches with the economics of clean energy Bitcoin mining today, creating the first direct point of connection between the Renewable Energy Markets and Bitcoin Mining.
Scarcity and Natural Price Discovery
Our approach contributes to the scarcity of SBCs or ensures they are produced with the exact energy requirements that miners face. This is crucial for organic price discovery, as the cost of generating an SBC will reflect real-time market dynamics. This feature not only adds a layer of economic robustness to the SBC market but also keeps it tightly linked with the ever-evolving Bitcoin network.
By synchronizing the SBC issuance with the current hash rate, we balance fairness for new market participants and establish a stable yet responsive pricing mechanism. This design choice enhances both the market integrity and the long-term viability of the SBC ecosystem.
Energy markets use energy attribute certificates (EACs), which are globally-accepted contractual instruments that enable the substantiation and verification of energy generated, delivered, and consumed on a shared energy grid. EACs identify the source and other characteristics of a MWh of electricity that are otherwise indistinguishable once those electrons enter the grid. These MWh are measured with a meter as the electrons leave the point of generation. EACs help to prevent double counting because they allow only one account holder in a tracking system to trade or retire EACs, and when the EAC is retired it can no longer be transferred.
SBC follows Greenhouse Gas Protocol Scope 2 Guidelines and its use of EACs because this ensures that bitcoin miners are able to make unique and exclusive claims about their clean energy usage. Without the use of EACs, bitcoin miners run the risk of making claims about clean energy use that have been paid for by others, thereby replicating the double-spend problem that Bitcoin sets out to solve.
Bitcoin miners can make clean energy claims without EACs under certain conditions as explained in the Sustainable Bitcoin Protocol (SBP) Whitepaper.
The SBC is designed to unlock Bitcoin’s clean energy potential without making any changes to Bitcoin itself, and does not “replace” Bitcoin in any way. The SBC is simply a market-based instrument intended to align two incentives: sustainable bitcoin mining and institutional investments in clean energy.