Sustainability
Sustainability of Crypto-Assets: Our Commitment to Transparent Information
Under Regulation (EU) 2023/1114 on Markets in Crypto-Assets (“MiCA Regulation”), crypto-asset issuers are required to publish, in their white paper, information regarding the environmental impact of their assets.
The European Securities and Markets Authority (ESMA), in its guidelines on sustainability transparency, extended this obligation to crypto-asset service providers (CASPs).
Our Challenge: Lack of Published Data
To date, the vast majority of crypto-asset issuers have not published the required data.
This creates a clear difficulty for companies like ours that aim to provide reliable and comprehensive information.
This is why Tilvest has developed its own methodology for assessing the sustainability of crypto-assets.
Our Methodological Approach
To carry out our project, we drew inspiration from authoritative publications considered the current “state of the art” in the field. These were based primarily on public sources or technical data from the protocols featured in our offering. We adopted assumptions that we deemed reasonable and consistent.
It is important to understand that the cost of a transaction reflects a decryption cost that varies depending on the consensus method used.
Within this context, we had to make certain choices, which we transparently share and justify here.
Two methods with one goal: to keep you informed!
There is a notable diversity among blockchains and crypto-assets.
Our main method for estimating consumption (“Method 1”) is based on collecting the monthly number of on-chain transactions using associated addresses (notably in line with the standardization consensus known as “ERC-20”). We then aggregate the consumption of each crypto-asset across all blockchains to determine total consumption.
For crypto-assets without an address (i.e., those native to their blockchain), we refer to the energy consumption of the network’s contributors (the so-called “miners”) and aggregate their consumption to obtain an overall value (“Method 2”).
To begin with, it should be noted that our calculations focused solely on the missing data for the crypto-assets available through our offering.
Details: Our Calculation Methods and References
Method 1
For Method 1, the retrievable data is the number of transactions. The overall consumption of a crypto-asset is then derived using the following formula:
Total energy = Σ [Tx count over Δt × average cost per transaction over Δt]
Given that the number of transactions is not readily accessible (as the data is encrypted or “hashed” and transactions are encapsulated in sequential “blocks”), some blocks may be unusable.
To compensate for missing data, we assumed that the number of transactions in a missing block is equal to the average number of transactions in the blocks we were able to retrieve. From this, we deduce an exploitable synthetic value.
Method 2
For Method 2, we relied on the research conducted by the University of Cambridge.
To calculate the overall values referenced above, these researchers analyzed the algorithmic techniques used and the compatible hardware for each protocol.
You can consult their work at:
https://www.jbs.cam.ac.uk/2023/bitcoin-electricity-consumption/
Our Critical Review and Confidence Index
To accompany each of our energy consumption estimates, we have developed a confidence index. Since these are estimates—and considering the limitations mentioned above, such as unavailable transaction data and exploitable blocks—it is difficult to produce perfectly contractual or systematically accurate values.
Within these limits, this index is intended to help you quickly assess the quality, accuracy, and reliability of the data provided, based on the sources and methods we employed.
This also serves as an internal benchmark to guide our continuous improvement efforts and “challenge” our next assessments.
The index is based mainly on the availability, relevance, and timeliness of the data used.
It is expressed, at our discretion, as a percentage, where 100% represents full certainty.
Interpretation of the Confidence Index