Sustainability as a Crypto Superpower

Transcript

and what i wanted to start with is pointing out that sustainability and climate change should feel extremely urgent right we often frame this as century shelling degrees that makes it feel incredible right but i was born in 1988 two thirds of the actual warming has happened during my lifetime so this is something that's happening right today is yesterday right this week this is probably a good time to be talking about this um there was obviously a huge heat wave um that that just swept across the world um yesterday was the warmest it has ever been in recorded history in paris also the warmest it's ever been in

recorded history in london right so this is a problem that we need to deal with um really quickly and it's not even the most urgent or uh or problematic um ecological problem right so this is the planetary boundaries framework there are eight different categories of variables that we can measure about the natural world we have defined boundaries so a safe zone an intermediate zone and a danger zone for each of these variables and global warming isn't even the variable that's farthest out of whack right so we're losing biodiversity massively quickly there's a huge amount of biogeochemical flows so phosphorus and nitrogen which are mainly from agriculture so we need to we need to understand and track all of the ways in which we are interfering with the natural world and

making our planet less sustainable and we need to do it really really quickly so i'm gonna i'm gonna walk through these uh these five different points here um so first i'm gonna talk about sort of the the texture of the problem right and sort of our philosophy of this problem and we really think that web 2 plus fiat is insufficient for solving these problems or even even sort of tracking and aligning incentives in order to solve ecological degradation and i'm going to going to talk about what we're doing in falcon green to build sustainability tools so web 3 native sustainability tools for tracking these problems and aligning incentives then i'm going to talk about this this web 3 global sustainability ledger and what that could look like in the future

i'm going to talk about why net zero is actually not enough um and then i'm gonna gonna shill the sustainable blockchain summit a bit which is happening this friday and saturday uh right after ecc in paris so the economy is an information processing system this is one of the few things that that marx and hayek agree on right they they ultimately both frame their points in terms of where information processing should happen and they do this very explicitly in their writing right so the economy is an information processing system another place you see this is kosa's theory of the firm cos asked why do companies exist why don't you just have individuals transacting in an economy and the conclusion that he

came to was that the boundary of the firm exists this boundary between internal transactions and external transactions is ultimately about trust and presumption of alignment and so between companies you have simpler transactions so you contract for a good or a service that is that is bounded both in time and in complexity whereas within a firm you have these things like employment contracts that are unbounded or you know much more complex and you can do that because you have this presumption of alignment and presumption of trust right and so what that means ultimately is that centralization in highly centralized companies is an

informational crutch right and so only price signal information can easily pass from firm to firm whereas you can have these much more complicated relationships within a firm where you can pass things other than price signal information much more easily right and what's exciting about where we are right now is that despite the fact the extractive economy was built with this crutch sort of fundamentally in place and central to it we now have the tools to build new types of organizations that can pass information other than price signals more efficiently between them and so why is this relevant to environmentalism and sustainability this is a schematic of the greenhouse gas protocol which is the gold standard for assessing an

organization's uh carbon emissions and so the way this works in um in sort of a schematized or you know quick view is that you have a company you want to understand it's greenhouse gas accounting um so you look firstly at what the greenhouse gas protocol the ghgp calls scope 1 emissions those are direct emissions from burning fuel on site as part of your operations you look at scope 2 which is emissions due to electricity you look at scope 3 which is far more complicated than scope 1 and scope 2 that's all of your emissions due to your supply chain so due to goods and services that you purchase and the first thing you do is you try to reduce your emissions due to scopes one through three and that comes back to why net zero is not enough which i'm gonna gonna

talk about a little bit at the end but then you what you do is you can use offsets and other tools to mitigate what you can't reduce right so try to reduce your your more direct impacts first then offset what you can't reduce and then um then you can you can you know do your own internal carbon accounting and you get a check mark you show that to your shareholders your investors and then you also are in a position to define what your downstream scope 3 emissions look like right so this is the accounting exercise that we want to do ultimately for every organization every company um but this is complicated and it's hard to get right you have to

double check a lot of things and so it takes auditors a long time to actually do this exercise right but we have to do it manually with the tools that we have now if we use web 2 and fiat we have to do this manually takes a long time takes external auditing firms months to make sure it's right and so what are the implications if we think of the economy as an information processing system and we want this type of information the sustainability information to be passed quickly from one company to another so we have accurate timely information to make decisions what's what are the implications of this right so company a goes through this exercise typically they do this exercise this auditing exercise once a year um they then pass that information down

their supply chain the next company takes that information uses it to determine it to determine its scope through emissions and then it takes a year to run through that auditing exercise itself then it provides that information to company c it takes another year so the ipcc is saying we need to decarbonize the entire world by 40 within eight years this this single year for every hop along the supply chain is just not going to cut it right we need ways of transporting this type of information through the economy much much more quickly and so here's a here's a great meme on this that the entire carbon accounting system is held up by excel um without particularly good methods for uh for

doing version control or anything right so this is just auditors like emailing excel sheets to each other and that's that's how we figure this stuff out and so we we can do a better job so going to talk a little bit about our take on how we're building this within the falcon ecosystem and within falcon green specifically um so falcon green is our effort to make environmental accounting a web 3 superpower there are two parts of this so we're trying to make filecoin itself verifiably sustainable and we're trying to build web3 native tools in order to solve this problem that i just scoped out so how can we take this information and pass it from organization to organization in a verifiable way so that we can move this information through the economy in minutes not in months or years

so um so ipfs right is the um the content delivery network of web3 um so if you if you're into networking that's you know similar to a company like akamai um in web 2 so ipfs is what content addresses your data and then gets it where it needs to be quickly whereas filecoin is for long-term storage right and it's it's a huge network it's you know closing in on 10 of uh of the the data storage capacity of aws um so it's big it's growing quickly it's getting close to one percent of all of the information and data centers in the world is on follow coin so it's a big network for long-term data storage so there are two places where falcoin itself uses electricity so in order to onboard data onto filecoin you have to

seal that data that uh that sealing process sets up a series of zero knowledge proofs that are going to allow you to prove as a storage fighter that you continue to store a copy of that data over time you then actually have to store that data over time which is the other major component of energy use of filecoin and so what we want to do if we want to be able to pass information from uh player to player in the value chain quickly and efficiently and verifiably we really want some source of truth as to what the emissions and what the energy use is of storing your files right and so we can go to the filecoin blockchain we can see crypto cryptographic proofs of how much data was onboarded how quickly and how

much data every individual active storage fighter every node in the network is storing over time we can then translate that into an energy use profile um if you um if you want some of these links um so these slides are at tinyurl.com filecoin-green-ecc there's a ton of references here um you can look up you know the documentation about what i'm what i'm talking about um so we did a lot of research talked to a bunch of storage fighters tried to understand what are the bounds on energy use given a certain profile for sealing and storage over time right and so we're able to take those proofs on the file coin chain translate them into energy use profiles and then we have this energy use view for every active node in the filecoin

network and so um you know as i said uh follow coin is closing in on um on uh one percent of all the data center storage capacity in the world um it uses um you know a bit less than that in terms of energy use um this isn't exactly an apple apple's comparison what this means is that ceiling energy is comparable to workloads run on typical um on data right so the energy to store data is comparable to the energy to store data outside of filecoin the energy to seal data is a little bit less than typical workloads run on data in a typical data center right but it's not massively energy and efficient and you can get a lot more information on this

um so then what else can we do with that rather than just looking at the energy use of filecoin globally as a network because we're able to see node by node how much energy is being used by each storage provider in the filecoin network we can then try to find their their location based on their ip and then we can look at how the energy use of the filecoin network is interacting with local power grids right so we don't just have this amorphous mass of energy use we actually have a detailed granular verifiable view of what the energy use of filecoin is location by location then what can we do next we can then act to try to try to mitigate the emissions from that energy use by connecting the network to

renewable energy so what we're able to do say you have a solar farm you want to supply this individual falcon storage provider they're both connected to the same power grid what the solar farm can do is meet what's called a renewable energy certificate that the storage fighter can then buy in order to account for its energy use and then make these renewable energy claims right we didn't invent this system we are plugging into existing renewable energy markets and doing this in this granular verifiable transparent way so that you're then able to go to the filecoin.energy dashboard you're able to see the energy use profile of an individual filecoin storage provider and then you're able to download the certificate which doesn't just say they're using renewable energy but it

says how much energy did they purchase where did they purchase it from and you're able to map the storage fighter storing your file to a specific solar or wind or hydro or biogas plant and see specifically where is the power being generated and from what source in order to store my files and so this is the type of granular verifiable detailed information that we think we're we're now in the position right with web3 native tools to provide to people so we're not just looking at sort of overall what are the emissions but we're looking at in this very detailed way right what specifically are your environmental impacts how can you reduce them how can you mitigate them so we also um we're working a lot with storage fighters in order to try to help

them reduce their emissions and impacts and make substantive verifiable claims that go beyond just the proofs on the chain so um if you're interested in this you can go to foulcoin-green.gitbook.io this is the the the sort of source of information both for our developer tools for looking at the renewable energy for the renewable energy use and energy use overall for individual falcon nodes and also things like if you're a storage fighter how do you become a more sustainable storage fighter so this is going in the direction for example of what descent is doing in the netherlands um they installed solar panels on their roof using a grant from the falcon foundation and what we're able to do is take the data corresponding to energy use measurements in their data center able

to take data from the inverter from their solar panels and make all that data publicly verifiable and audited by a third party so that we're just able to see okay not not even just based on these these estimates from the blockchain but based on actual audited measurements how much energy are they using and what energy are they producing locally right so you can actually see if you go to um go to this url down here there's a dashboard where you can see for each of their miner ids what is the the power use measurement from the the pdus that are are actually monitoring their their racks and their data center you can then see what is the net energy use of the overall facility so how much power are they pulling from the local power grid and then you can

see day by day what is their rooftop solar production and how much energy are they producing locally right and so this is this is something we're very much scaling up and working with storage fighters um and building all of this whole dashboard and auditing process in a way that nodes on follow coin hopefully nodes and other network networks too can use this same process for um making extremely substantive granular claims about their their sustainability practices so what what does this add up to right where is this where is this going how do the pieces i just described that we're working on connect to that philosophy i just described about why we need web3

native tools in order to solve sustainability globally so clearly this is this is what we're doing in our use case right so this is a schematic of the falcon value chain you have electricity you have hardware those go to individual falcon storage fighters they provide storage as a service to clients and you know that's that's the value chain right then you know maybe the clients provide other services to people you could extend this so we're building the tools to allow you to measure no matter where you are in this value chain measure what your environmental impacts are and then pass that information on to the next step in that value chain and what that means is that no matter where you are in the value chain you have the information that you need to decide what products

and services to buy in order to reduce your impact right so so that's that's the goal right and so we're building this in a way where as as much as possible we want to build this in our use case do a really good job making this verifiable and then generalize it as much as we can to allow anyone who wants to do something similar to apply it to to whatever their network is or beyond web 3 to their value chain so you know why why is this necessary why is this fundamentally different why did i make that really strong claim about web 2 plus fiat is actually not enough to solve sustainability well so so my claim is that fiat money is actually a computationally insufficient substrate for modeling environmental externalities so like what does that mean um money

knows how to add right you you have one you have one coin you have two coins they you add them they have they have two coins right um knows how to subtract knows how to do a couple of other things um this is fundamentally different right this is like computationally different from modeling um environmental externalities right so say you have um so you have one plot of land it has some value you have another plot of land it has some other monetary value you put them together and the value to the ecosystem is not the sum of the monetary value of each of those plots of land right and those plots of land may have very different carrying capacities for biodiversity um if they're contiguous with each other that's a larger area for um for you know your ecosystem to thrive

in right so the same area of land is much more valuable to the ecosystem if it's continuous than if it's broken up into a lot of different pieces so what this means is that environmental value can't be reduced to just a price signal and in web 2 plus fiat you have this price signal that can be transferred easily between firms or between companies but to get that other information to get that environmental modeling information you uh there's there's no easy way to transfer it right and that's why you need auditors and that's why it takes a year for every hop down your value chain right and so what we need to do is transform from the sustainability report one year cadence um into a system um in which we're able to make these

models of individual companies or individual projects and we're able to audit them maybe on a quarterly basis or on a yearly basis but then once we've made those models we can actually pass that information at the speed of transactions not at the speed of manual auditors right and there's the the reason we need web3 to do this right is is all of this right we need to take data we need to content address it um if it's self-sovereign we're able to ascribe changes to individual players and the in the system um we you know we need public verifiability like for example referencing the filecoin blockchain um for individual storage fighter energy use right all that information is public that allows you to put bounds on what the energy you should be for an individual storage fighter um

i haven't talked about zero knowledge but that absolutely needs to be part of this right allowing us to prove allowing a company to prove to um it's its customers that what it's telling them agrees with what it's telling everyone else right so you can see how these tools actually do lead to a phase change in how we are going to be able to account for environmental externalities and pass that information through supply chains so you know we can rebuild the global carbon accounting system to transmit data in minutes not in months and again the ipcc the international the intergovernmental panel on climate change says we need to decarbonize uh the entire world by about 40 in the next eight years um in order to avoid the worst effects of climate change if it takes a year for every hop in the value

chain for that information to be current we're just not going to get there so um i wanted to touch on why net zero is not enough um and um so this is this is uh you know i stole this from the title of this this great book by holly jean buck who's a professor at the university of buffalo um and she says you know net zero is not enough because if you imagine a world in which we are net zero because we emit just as much as we do now but we also pull carbon out of the atmosphere that is a very different world from one in which we emit drastically less than we do now and we also pull carbon out of the atmosphere right so when you are

buying fossil fuel products you are locking in this extractive ecosystem that has um you know people talk about co-benefits to offsets right so that's when you're not just pulling carbon out of the atmosphere but you're restoring the planet the fossil fuel industry does the opposite right so we actually need to not just understand what our emissions are and get to net zero we need to understand what our emissions are reduce those emissions in order to not lock in this entire extractive industry that is you know not just causing climate change but also causing environmental degradation um and we need to get to net zero by drastically reducing our emissions and then also offsetting what we can't reduce right and so we need all of these tools in order to build that um that whole

ecosystem and that whole world so the the last thing i wanted to plug is um please come to the sustainable blockchain summit if you're interested in this um you can get more details at sbs.tech sustainable blockchain summit um it's going to be this friday and saturday it's going to be a great time if you want a discount on tickets there you can use the code ethcc um there's going to be most of the major players in the space there you know so there's going to be you know toucan klima flow carbon uh regen network um a ton of people in the space um troy cross is going to be there who's a bitcoin maxie alex devries from digiconomist who's going to is going to be there who's the opposite of a bitcoin maxi we're going to have some really good conversations about all of this and

the goal is to get people with a deep understanding of how to build these tools in the same room as people with a deep understanding of all of the work that's gone into things like the greenhouse gas protocol and all of the the legacy industries that have spun up in order to manage environmental assets right so the the un um framework convention on climate change is going to be there it's a supporter of both the hackathon that we just ran and a supporter of the the summit itself the rocky mountain institute um gold standard which is one of the major offset accreditation bodies is going to be there um so um if you want to continue these conversations please come to the sustainable blockchain summit um we just had a great hackathon that i just mentioned um in partnership with chainlink hedera and

fluence um there were i think 200 there were 200 something 250 or something participants in it something like 80 projects um we had a really good time then here are uh different ways to um to connect with all of this again you can get to these slides at tinyurl.com filecoin-green-ecc um if you want to you know there are a ton of links in everything i just went through if you want references to anything i talked about my contact information sign up for updates and uh plug-in we'd uh we'd be happy to talk to you thank you [Applause] and if anyone has a question we can do a

two-minute q a henry do you have any plans to have other ecosystems like adopt these tools and i guess are you trying to generalize the tool links it doesn't just apply to the filecoin ecosystem but to you know mining more generally in the space yeah definitely i mean everything we're doing we're trying to build in a way that's as modular as possible um so you know this this auditing process right is meant to be scalable so that if you want to make strong claims about a data center you can you know get apis you know and connect those endpoints with whatever monitoring tools you have right so like your pdus on your on your individual data center racks and then you know connect to those and then have

an auditor that's not us right it's a third-party auditor or choose a different third-party auditor to go in and like audit your data right we're also working with a bunch of players on on co2.storage which is an initiative that we're um we're you know starting to launch to sort of standardize how um how offset projects work with environmental data right and make sure everything is like content addressed and make sure that you have access to all this data so you can determine what's a good offset what's not a good offset so we definitely are building tools with that in mind another you had another question okay yeah i'm curious like when you use like cj approves or something to like prove that you use like certain amount of energy like what prevents these people

from just not putting that data on chain and like hiding it forever yeah yes so zq proofs are not a substitute for auditing period right like you have to audit information at the boundaries of the system and you have to audit models within the system but then zk proofs are what's going to allow you to make representations to offset companies to you know other members of your supply chain and not show them all of your books right but allow them to see that what you're telling them agrees with what you're telling everyone else right which is like especially if you know we're going to generalize these tools right to legacy industry um that's crucial because they don't want to tell everyone

how much power they're using right if you run a factory how much how much energy you're using is like directly tied to your margin and you don't want competitors to know that but you do want to be able to tell people you know how much what what's the carbon intensity of my products right and so that's where zero knowledge comes in is you know this is something we're working on we haven't built this yet but like that's what's going to allow you to let people know you know prove that you're not lying right prove that like carbonate equals carbon out and you're not like stashing it somewhere thank you everyone awesome thanks