Cardano’s Sustainability Report: Meeting MiCA Regulations
On July 2, 2024, the Crypto Carbon Ratings Institute (CCRI) published a detailed report on Cardano in line with the EU’s Markets in Crypto-Assets (MiCA) regulation. This initiative mandates crypto asset issuers to disclose sustainability indicators as per MiCA’s guidelines. The Cardano Foundation partnered with CCRI to ensure accurate data collection and blockchain monitoring.
MiCA Regulation Overview
The Markets in Crypto-Assets Regulation (MiCA) is a regulatory framework introduced by the EU to establish consistent rules for crypto-assets across member states. Launched in June 2023, MiCA aims to offer legal clarity, boost consumer protection, and maintain market integrity in the dynamic crypto sector. Implementation will occur in phases, with key milestones set for 2024.
MiCA Requirements and Compliance
- Asset-referenced tokens (ARTs) and e-money tokens (EMTs) must adhere to stringent rules from June 30, 2024.
- Issuers need to maintain liquid reserves, ensure redeemability, and publish detailed white papers.
- Crypto-asset service providers (CASPs) must obtain authorization from EU national authorities, follow AML policies, and prioritize consumer protection.
Stablecoin Guidelines and Sustainability Compliance
- Algorithmic stablecoins are prohibited under MiCA regulations.
- Fiat-backed stablecoins must meet strict liquidity standards to ensure full backing by reserves.
- Providers must disclose environmental impact as part of broader sustainability integration in financial norms.
CCRI Assessment of Cardano’s Sustainability
The CCRI report commends Cardano’s energy-efficient consensus protocol, highlighting its low electricity consumption compared to PoW systems like Bitcoin. Results indicate Cardano’s annualized energy usage is 704.91 MWh, showcasing the network’s efficiency.
Key Findings from CCRI Report
- Cardano’s annual carbon footprint is 250.73 tCO2e, with a carbon intensity of 356 gCO2 per kWh.
- Marginal power demand per transaction per second in the Cardano network is 0.192 W.
- Cardano demonstrates superior energy efficiency and lower carbon footprint compared to peers in CCRI’s PoS Benchmarking Study.
Methodology and Metrics Used by CCRI
- Network Power Calculation involves multiplying nodes by a representative node’s power consumption.
- Electricity Consumption analysis derives total energy used over a specific period.
- Carbon Footprint calculation multiplies electricity consumption by the network’s carbon intensity factor.
Compliance with MiCA Standards
CCRI outlined ten mandatory sustainability indicators for Cardano, focusing on energy consumption, GHG emissions, waste production, and natural resource impact as per ESMA’s technical standards.
Key Sustainability Metrics for Cardano
- Energy Consumption: 704.91 MWh annually.
- Non-renewable Energy Usage: 69.12% of total energy.
- Energy Intensity: 0.000168 kWh per transaction.
- Scope 1 & 2 GHG Emissions, Waste Generation, and Impact on Natural Resources.
Cardano’s Environmental Responsibility
Cardano’s commitment to sustainability, energy efficiency, and environmental responsibility positions it favorably within the evolving crypto landscape. By aligning with MiCA regulations and collaborating with CCRI, the Cardano Foundation showcases transparency and eco-consciousness.
Hot Take: Embracing Sustainability – Cardano’s Road to Compliance
Cardano’s compliance with MiCA standards demonstrates a proactive approach to sustainability and regulatory transparency while maintaining energy efficiency and environmental responsibility. The partnership with CCRI signifies a commitment to meeting evolving industry norms and aligning with global sustainability efforts.
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