Key Takeaway Points

• Cardano Foundation and CCRI introduce MiCA-compliant sustainability indicators.
• Cardano's consensus protocol is highly energy-efficient compared to PoW protocols.
• The Cardano network has an annual carbon footprint of 250.73 tCO2e.
• Cardano's annual electricity consumption is 704.91 MWh.
• The report aligns with ESMA's draft RTS under MiCA regulation.

The Cardano Foundation, in collaboration with the Crypto Carbon Ratings Institute (CCRI), has released new sustainability indicators for the Cardano network, compliant with the upcoming Markets in Crypto-Assets (MiCA) regulation in the European Union.

This regulation requires crypto asset issuers and service providers to disclose specific sustainability indicators.

To comply with MiCA's requirements, it is essential to monitor the blockchain network, gather relevant data, and calculate these indicators using a scientific methodology. To ensure the quality and objectivity of the sustainability indicators for the Cardano network, the Cardano Foundation enlisted CCRI's specialised expertise. This collaboration has produced comprehensive sustainability indicators tailored specifically for the Cardano network.

The detailed report includes an extensive methodology description and the results of this assessment. This initiative underlines the commitment of Layer 1 networks like Cardano to sustainability and regulatory compliance. The report not only helps the Cardano ecosystem meet MiCA requirements but also serves as a benchmark for other blockchain networks aiming to fulfill regulatory sustainability disclosure obligations.

Report Highlights

• Energy-Efficient Consensus Protocol: Cardano employs a consensus protocol that consumes significantly less electricity compared to Proof of Work (PoW)-based protocols.
• Electricity Consumption: The Cardano network's total annual electricity consumption is 704.91 MWh as of May 2024.
• Carbon Footprint: The network's annual carbon footprint is 250.73 tCO2e, with a carbon intensity of 356 gCO2 per kWh.
• Power Demand per Transaction: The marginal power demand per transaction per second (TPS) in the Cardano network is 0.192 W.
• Regulatory Compliance: The report includes sustainability metrics in line with the draft regulatory technical standards (RTS) provided by the European Securities and Markets Authority (ESMA) under MiCA regulation.

Frederik Gregaard, CEO, Cardano Foundation said: "As the adoption of crypto assets grows, so does the imperative for providers to address sustainability considerations. We’re proud to be partnering with CCRI, an entity recognized as the gold standard for sustainability data in our sector. Together, we can ensure that the Cardano network meets the stringent requirements of the MiCA regulation, aiding financial institutions in integrating sustainability into their digital asset propositions and aligning with investors' increasing ESG awareness."

Dr. Ulrich Gallersdörfer, CTO and Co-Founder, CCRI added: "Scientific methodologies and real-world data are essential for accurately measuring and managing the environmental impacts associated with blockchain networks. Until now, many networks lack necessary sustainability reporting under the Markets in Crypto-Asset regulation. We are pleased to collaborate with the Cardano Foundation, leveraging our expertise and infrastructure to develop MiCA-compliant sustainability indicators, helping the Cardano ecosystem lead the way in regulatory compliance and environmental responsibility."

This report marks an important step towards enhancing the transparency and sustainability of the Cardano network. It serves as a valuable resource for the broader blockchain community in navigating regulatory requirements.

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Source: Cardano Foundation