Finextra Research spoke to Matt Hawkins, CEO and founder of Cudo Ventures, about making use of ‘spare computing’, rather than continuing to build new data centres and server farms, which in turn, depletes the planet’s resources.

“The demand for increasing compute is inevitable, but how can we ensure our actions are sustainable? As we have more mobile phones, servers and infrastructure, we’re running out of more of the Earth’s precious metals. 30% to 50% of the time, that infrastructure is doing nothing, so we must learn to benefit from what has already been built,” Hawkins says.

With cloud, a massive amount of data can be retained and analysed in a viable and cost-efficient manner using artificial intelligence and machine learning, which is ideal as Hawkins points out, as these technologies are designed for simulations and therefore, financial institutions can pre-emptively calculate the impact of their decisions on the environment.

The world’s data centres account for over 400 terawatt-hours (TWh) of electricity a year, which is around 3% of total global demand, and experts predict this figure will increase to 20% by 2025. Alongside this, digital infrastructure results in 700 million tonnes of carbon emissions a year - 2% of the global total - and IT-linked carbon emissions are expected to overtake the aviation and shipping industries in the next few years.

Further to this, Bitcoin consumes 0.28% of the world’s total electricity consumption, which is an estimated 61.76 TWh per year. By comparison, the Czech Republic uses an estimated 62.34 TWh per year while Switzerland consumes 58.46 TWh. If Bitcoin was a country, it would be the 41st most-energy-demanding nation on the planet.

The digital currency's energy demands are derived from the computing power needed for mining, where machines are connected to the network to verify transactions. In order to minimise this, Bitcoin miners have relocated to countries where geothermal energy is cheap. Hawkins explains that “Bitcoin is version 1 of blockchain and version 1 of anything is never really the optimum solution, it just starts an industry or a business.

“However, it has proved the demand for this type of solution and that type of currency. The true value is in blockchain and while Bitcoin is the largest power consumer, it is also estimated that between 25% and 50% of the power that is used for Bitcoin is in renewable power anyway.”

Taking Ethereum as an example, what Hawkins refers to as the “first cloud version of blockchain”, he points out that real and valuable blockchain platforms will move to a proof of state model that does not use energy and will allow organisations and even governments to reliably share data and ensure that the information is correct.

But how can blockchain help with reporting ESG in the financial services industry? As banks have to buy in to an open and public record, Hawkins believes that perhaps digital banks would be more susceptible to this as records are placed online from the start - these neobanks will “lead the way and legacy banks will be the last ones to join.”