The New Role Of ICOs In Green Investing
If there are two things causing seismic shifts in the world today, it’s Blockchain and green technology. It was only a matter of time before we would find a way to bring these two revolutionary concepts together. There is a growing trend for using blockchain technology and ICOs (initial coin offerings) in order to raise much-needed funds to develop sustainable and green energy markets.
The Luxembourg Stock Exchange (LuxSE) recently became the first stock exchange in the world to offer a dedicated green platform. The LuxSE is unique in that it operates in a small country and has only 25 local equity listings, yet it is fast becoming a world powerhouse in listing international securities, with over 36,000 securities from over 2,500 issuers in over 100 countries. The LuxSE now lists 50% of the world’s green bonds.
There is a clear demand for investment in green technologies and the LuxSE is ensuring that those who want to get on board can do so in a responsible way. There is a strict eligibility criterion for listing on the Luxembourg Green Exchange and investors have access to all documentation about the underlying green or sustainable products.
Following on from this move, there is a growing trend for green companies to seek investment through the use of ICOs or STOs. Initial Coin Offerings in their simplest form are a form of crowdfunding through the tokenization of assets, which can help to avoid many of the restrictive regulations a company might face while working within the existing legal framework applicable to fundraising. ICOs have come under fire in recent months due to the high number of scams and failed ICOs which have led to investors losing money. However, like the technology they are investing in, green ICOs are proving to be far more sustainable.
In February 2018, WePower announced that it has successfully raised $40 million from an ICO for its green energy and sustainable living projects. With 22,933 contributors, it was the largest ICO in the energy space of all time.
Another company pioneering the green energy ICO space is Silent-Power Ltd. This award-winning company has developed mini power plants that produce power, heat and cold using methanol. This simple alcohol molecule can be synthesized out of hydrogen and CO2. If renewable power is used to create hydrogen out of water, and CO2 is abstracted from flue gas from an industry burning a renewable fuel (like wood or waste), the result will be methanol with a negative carbon footprint, meaning it is actually a CO2 storage. Using this “green Methanol” enables a carbon-neutral energy supply.
Another approach to using Blockchain for green investments can be seen in the model adopted by Swytch Energy. Swytch Energy uses Blockchain technology to reward the companies and individuals that reduce their carbon footprint the most. Using machine learning and artificial intelligence, the system can work out how much carbon has been displaced and rewards account holders accordingly.
Other companies successfully using Blockchain technology to combat climate change include NewEra Energy, which is using the Blockchain to connect carbon initiatives around the world to fix a fractured data problem. And finally, Greeneum is a Blockchain-powered organisation aiming to incentivise green energy production by offering a decentralised platform for energy trading.
The common interest of these green energy initiatives is to push the energy transition forward. But there are so many obstacles they are facing during fundraising. First, there is a lack of transparent data available, which makes proving claims about the benefits of green energy more difficult. Second, the energy industry of today is primarily chasing after subsidies and the development strategies of the big players are directed by the outlook on subsidies and taxations. New concepts have to pass a rocky road, as they have to provide working proof of technology within a heavily controlled market, while still being excluded from subsidies until they can deliver proof of their claimed advantages. Third, economies of scale apply especially in the energy sector, a large central power system reaches a higher efficiency and lower specific costs than several smaller but decentralised ones. New technical pilot installations however have to start small, in a specific application, and have to be a very wisely chosen investment.
With world powers such as the United States slashing funding to their own Environmental Protection Agency, a decentralised system is needed in order for interested parties to share data and build a worldwide picture of energy use and carbon emissions.
ICOs and blockchain technology could be one solution for getting around the issues of a fragmented energy sector and individual country regulations. ICOs often operate outside of the usual financial institutions and can offer more long-term returns than current investment models which focus on short-term profits.
For more information regarding Silent and our innovative vision to create the carbon neutral “Methanol Economy”, please visit our website www.silent.technology.