Case Study: Payment Processor
Company Profile:
PayStream, Inc. is a global payment processing platform that also offers custodial services for cryptocurrencies, including Bitcoin.
While the company doesn’t actively mine Bitcoin, it holds BTC in user wallets and internal treasury accounts.
Under Scope 3, PayStream discloses the holding emissions associated with Bitcoin on its balance sheet, reflecting the indirect emissions attributed to the mining of those BTC units.
1. Status Quo: Reporting Holding Emissions Without BECs
1.1. Current Emissions Accounting
Estimation: PayStream uses broad industry-average data on the carbon intensity of Bitcoin mining. This results in approximate figures that may inflate or understate the true emissions footprint, given the complexity of the global mining landscape.
Voluntary Disclosure: They publish these estimates in their annual sustainability report. However, the lack of specificity in how the BTC was mined (renewable vs. fossil-based) makes it difficult to refine or credibly reduce their reported emissions.
1.2. Existing Market Instruments
RECs (Renewable Energy Certificates): PayStream could purchase generic RECs to offset its “share” of Bitcoin’s emissions. But these RECs typically apply to Scope 2 electricity usage, not a Scope 3 commodity footprint like BTC. RECs wouldn’t directly address the embedded mining emissions of the Bitcoin they hold.
Carbon Offsets: PayStream could buy offsets (e.g., from reforestation or methane capture projects) to “neutralize” their Bitcoin-related emissions. While offsets can cover any GHG footprint, they don’t create a direct link to how the Bitcoin was actually mined. Critics might view offsets for Bitcoin holdings as a patchwork solution that doesn’t necessarily incentivize greener mining upstream.
2. Introducing Bitcoin Emissions Certificates (BECs)
BEC Concept: A specialized market-based instrument representing the verified daily emissions for a certain volume of BTC based on actual mining data. If PayStream acquires BECs that align with greener or lower-emission mining, they can credibly claim a reduced emissions factor for the Bitcoins they hold.
2.1. What Changes with BECs?
Supplier-Specific Emission Factor: Instead of using broad, industry-average data, PayStream can attribute an actual (or lower) carbon intensity to the BTC if it’s tied to miners verified through the BEC registry.
Daily Hashrate Logic: BECs are issued per day per BTC, based on the miner’s share of the network hashrate and the miner’s verified Scope 2 emissions. This ensures an auditable chain of environmental attributes.
3. Benefits of BECs for PayStream, Inc.
3.1. Enhanced Scope 3 Transparency
Direct Connection to BTC Holdings: BECs specifically track the emissions linked to Bitcoins mined under certain emission factors. PayStream can now replace a one-size-fits-all approach with supplier-specific data (i.e., from miners who’ve proven renewable or low-carbon usage).
No Double Counting: BECs are retired upon claim, ensuring the same emissions attributes aren’t sold multiple times. This fosters stronger trust with ESG analysts and stakeholders.
3.2. Credible Emissions Reduction vs. Generic Offsets
Market-Based Reporting: By using BECs, PayStream can demonstrate that the Bitcoins they hold are “greener,” aligning with market-based logic (analogous to how Scope 2 RECs reduce the reported emissions for electricity).
Reduced Greenwashing Concerns: While carbon offsets are sometimes criticized for uncertain additionality, BECs directly address the source of Bitcoin’s emissions: the mining process. This can be more compelling to investors and rating agencies who want authenticity in how cryptocurrency emissions are managed.
3.3. Competitive & Brand Advantages
ESG Differentiation: As institutional demand for Bitcoin grows, investors and corporate clients increasingly look for environmentally responsible crypto services. BEC usage signals climate leadership, differentiating PayStream from competitors who merely offset BTC emissions with generic projects.
Potential for “Green BTC” Products: PayStream can bundle custodial services with BEC-backed BTC, potentially commanding premium or specialized offerings for sustainability-minded clients.
3.4. Influence on the Mining Network
Incentivizing Renewables: If PayStream consistently demands BTC tied to BECs, it creates financial incentives for miners to transition to cleaner energy, thus contributing to broader decarbonization of the Bitcoin network.
4. Comparison with RECs & Offsets
Instrument
Applicability
Scope & Relevance
Direct Link to BTC
RECs
Typically Scope 2 electricity usage
Neutralizes electricity-based emissions (not BTC)
Indirect—no direct link to BTC mining
Carbon Offsets
Can be applied to any emission source
Generic offsetting mechanism
No direct link to specific BTC mined
BECs (Proposed)
BTC holdings (Scope 3) using miner-specific emission factors
Purpose-built for Bitcoin; links to actual hashrate
Fully tied to the BTC network, daily hashrate, & miner data
From PayStream’s perspective, BECs merge the best of both worlds: a certificate-based approach (like RECs) that directly ties to the underlying commodity (Bitcoin), ensuring the emission attributes cannot be double-counted.
5. Anticipated Outcomes
Accurate Scope 3 Inventory: PayStream can report a verifiably lower carbon footprint for the BTC on its platform, meeting stakeholder expectations for precision and responsibility.
Stakeholder Credibility: Being an early adopter of BECs signals PayStream’s commitment to legitimate, sector-specific decarbonization, resonating with ESG investors and environmental advocacy groups.
Policy Readiness: Should regulators or standards bodies move to formalize crypto carbon accounting, PayStream’s adoption of BEC best practices positions them as a proactive and compliant market leader.
Conclusion
For a payment processing and crypto custody platform like PayStream, transitioning from generic offsets or basic industry-average assumptions to BEC-based reporting represents a tangible upgrade in clarity, credibility, and alignment with the Bitcoin network’s actual emissions. This is especially relevant at a time when Scope 3 reporting demands more granular, verifiable data and when ESG-conscious clients seek true climate accountability in digital asset services. By leveraging BECs, PayStream not only benefits its own sustainability profile but also fosters a broader market incentive for greener Bitcoin mining.
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