In the eyes of the crypto-savvy at marketing and PR firms, brands may find blockchain more appealing now that Ethereum has completed its “merge” and drastically shrunk its carbon footprint.
The decentralized, open-source blockchain reduced its carbon emissions by more than 99.9% on September 15, according to a report from blockchain carbon-emission data platform the Crypto Carbon Ratings Institute. ConsenSys, an Ethereum software company, commissioned the study.
Ethereum’s massive energy reduction stems from abandoning a mechanic called “proof of work,” which required crypto-miners to solve puzzles to validate new blocks of transactions added to the chain. Finishing those puzzles consumed a tremendous amount of electricity at 23 million megawatt-hours per year.
Ethereum now relies on a mechanic called “proof of stake,” which allows those who have staked their tokens to verify transactions and create the next block in the chain.
That nitty gritty might be over the heads of those who have dismissed crypto. But for brands looking to work with a cleaner blockchain, the info that really matters is that Ethereum now emits around 870 tons of carbon, compared to the roughly 11 million tons pre-merge, said Rob Davis, chief digital innovation officer at MSL U.S.
“That’s why the industry and everyone involved in Ethereum is focused on the environmental thing, because that’s easy to understand,” said Davis. “Ninety-nine-point-nine-percent reduction in energy — I get that.”
“I think there’s still breaking down that needs to be done. That’s going on, and it’ll continue to be going on,” he said. “This just gives a positive push and gives everybody something to talk about.”
With brands like Netflix entering Decentraland, Davis and others see companies figuring out what crypto-based platforms they can use to reach consumers, most often through non-fungible tokens or the metaverse. Walmart also entered the metaverse this week with the launch of two experiences: Walmart Land and Walmart’s Universe of Play.
Zeno Group recently launched Z3, a global consultancy dedicated to Web3 that was born out of growing client demand.
“We were doing enough work that it made sense for us to formalize [into Z3],” said Rob Stone, head of Z3.
Davis said he’s also seeing brands understand just how far they want to go with crypto, whether they’re experimenters who open a wallet and watch the market or more dedicated testers who are beginning to build out sections of their business.
He added that brands that are invested in sustainability now have an avenue to use blockchain, and those who have used NFTs and Web3 can explore sustainable marketing post-merge.
But brands need to be aware of other issues concerning Ethereum and crypto more generally. Metaverse platforms like Decentraland and The Sandbox had low daily user counts of around 1,000 in April despite millions of investor dollars flowing through them, CoinDesk reported. Clean crypto may not do much to improve those numbers, and it already does little about high fees for “gas,” a unit of measurement representing the amount of computational effort needed to execute some operations on the Ethereum network.
Berlin Cameron CEO Ewen Cameron said he foresees the allure of clean crypto resulting in more NFTs, which usually exist on the Ethereum blockchain, additional Web3 experiences and more brand loyalty rewards programs like Starbucks Odyssey.
This month, Starbucks launched a program that allowed rewards members and employees to purchase digital collectible stamps in the form of NFTs powered by Polygon, an Ethereum scaling platform that allows developers to create dApps, which are decentralized apps that run autonomously.
“It’s a utility related to loyalty,” Cameron said. “It’s a functional thing in which NFT is the backbone technology to ensure that functionality is authentic.”
Ethereum operates in a separate category from crypto that still consumes huge amounts of electricity through proof of work, like Bitcoin. Davis speculated that the merge may put pressure on other forms of crypto to reduce their carbon emissions. Even if investors and brands weren’t concerned about the environmental impact of using crypto pre-merge, environmentally minded consumers may put pressure on crypto, and the brands using it, to clean up their act.
There are also regulatory concerns. Bitcoin and others may hesitate to embrace proof of stake after Securities and Exchange Commission chair Gary Gensler said on the day of the merge that the transition could push crypto into the “security” category.
Labeling crypto a security could result in more government regulation, which doesn’t mesh well with a decentralized currency. Ethereum’s stock fell by about 15% not long after Gensler’s comment.
The merge may not have erased every issue with Ethereum, but for marketing agencies like Media.Monks, it represents an opportunity to show brands what crypto is capable of.
“This is the biggest crypto event since the formation of the first block of Bitcoin,” said Funs Jacobs, Media.Monks category lead for gaming. “It’s a massive step for us as an agency. We support use of blockchains and decentralization if it’s a fit [for clients].”