BitGo, Sustainable Bitcoin Protocol Launch ESG-friendly Bitcoin-backed Token

As the price of bitcoin has stabilized in recent weeks, and notched a notable increase in performance terms over the past seven days, a new joint venture designed to capitalize on institutional interest in ESG Bitcoin initiatives is set to hit the market.

Sustainable Bitcoin Protocol (SBP), has teamed up with BitGo — the crypto service provider known for its digital asset custodial solutions — to launch what both companies dubbed “the first sustainable custody solution” in a statement provided to Blockworks exclusively.

It’s called the “Sustainable Bitcoin Certificate (SBC),” representatives told Blockworks, and it involves an on-chain solution to address problems environmental proponents say have long plagued bitcoin mining: dirty energy.

Non-renewable energy sources still power mining hardware on the original proof-of-work blockchain, in many parts of the world, meaning securing the Bitcoin network adds carbon pollution to the atmosphere.

The crux of BitGo and SBP’s partnership — SBCs — are “on-chain assets that represent sustainable Bitcoin mining and can be added to the holdings of a Bitcoin investor, 1:1, ensuring that they are sustainably holding Bitcoin without disrupting its fungibility.”

Brad van Vorhees, SBP’s chief executive and co-founder, told Blockworks on Thursday that the partnership with BitGo is not a new idea. The CEO and his team have “recognized this opportunity for a couple of years actually,” he said.

“It’s because we’ve had the time to have the right partner join us to fill out the technical structure,” he said. “It’s the right time to leverage bitcoin to help drive the clean-energy transition — and ultimately change the narrative from ‘Bitcoin is a sustainability problem’ [to]…there’s unique potential to drive the clean energy transition [with BTC], and that’s really what we’re trying to unlock.”

Institutional winds at BTC’s ESG sails?

The effort is getting off the ground as retail and institutional traders alike are pushing BTC’s price, as well as associated volumes and market capitalization, generally higher over a prolonged period of time.

Its end result is designed to offer a viable on-chain alternative to past and prevalent attempts to mitigate bitcoin’s environmental impacts — including tokenized, off-chain carbon credit models with crypto-native backing.

Carbon credits have been floated and have gathered steam, at least here and there, especially among Wall Street players looking to gain ESG exposure.

The metrics defining how ESG relates to crypto carbon credits have resulted in a mixed bag, according to previous Blockworks reporting, but the sentiment did not altogether stop those efforts from moving forward last year.

Though bitcoin was roughly flat over the last 24 hours, the asset is up about 12.8% on a seven day-basis and about 16.5% over the past 30 days, marking a notable stabilization and ensuing recovery from the 49.5% price plummet of 2022.

Macro headwinds, including the Fed’s shifting stance on interest rates and the SEC’s moves to reign in what the US regulator alleged as bad crypto actors buffeted digital and traditional financial markets.

“We are excited to partner with SBP to offer our clients a solution that addresses their concerns around Bitcoin’s environmental impact while incentivizing verified clean energy use in bitcoin mining,” said Steve Scott, a director at BitGo, in the statement, a novel solution he calls “a key differentiator” in the custody space.

“This collaboration allows us to offer the most secure and sustainable Bitcoin custody solution on the market, providing our clients with a way to hold Bitcoin that aligns with their investment strategies and values,” Scott said.

A “proof of sustainability API” is in the works, which is designed to allow investors to maintain exposure in a 1:1 ratio to BTC and SBC, the on-chain token under BitGo custody, which has already obtained regulatory approval.

BitGo and van Vorhees’ SBP summed up their team up by saying “the new offering aims to address the increasing demand from ESG and climate-focused institutional investors who want to hold Bitcoin but are concerned about its climate impacts.”

There are 19.2 million bitcoins in circulation, and van Vorhees estimated the “entire renewability certification market” at around $26 billion and the bitcoin-specific ESG market at $12 billion or so. Carbon credits are not included in either metric.

If you take the energy consumption and associated costs of renewable power premiums into account, van Vorhees said the impact of the token SBC would mitigate bitcoin’s environmental impact by 85x over a 25-year time horizon. That’s provided SBC can maintain a 1:1 backing to BTC.

The end goal, the SBP founder said, is “verifiably ensuring that bitcoin miners are using renewable energy from the grid, ensuring that every single bitcoin [is mined] in a totally transparent way.”

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