Climate change is the issue of our time. From policymakers to the individual, every one of us has a responsibility to do our part to ensure that sustainability and green practices are implemented throughout society.

Indeed, governments across the world, from the U.S. to China, are increasingly taking a proactive stance on climate change, with COP26, the recent 2021 United Nations Climate Change Conference, serving as a driving impetus toward the goals of the Paris Agreement in inspiring climate action.

Corporations are also stepping forward to take greater responsibility, with many investors no longer considering financial performance alone a sufficient measure of success — ESG measures, i.e., negative externalities, are increasingly taken into account to determine the true value of business activity for society.

In this context, the process of revitalizing our financial infrastructure is increasingly under the spotlight. How well do Bitcoin and other digital assets meet ESG criteria? This question has become ever more important as crypto adoption reaches wider audiences. Multiple Bitcoin futures ETFs have now been approved and are trading in the U.S., while institutional adoption is also reaching new highs, with many of the world’s largest financial institutions, including Standard Chartered, State Street and Citibank quietly building capabilities in the space.

Growing regulatory clarity is also enabling a broader range of participants globally to accelerate their strategies for digital assets. The EU’s comprehensive Market in Crypto-assets (MiCA) framework continues to move through the legislative process in the European Parliament. While in the U.S., Gary Gensler’s Securities and Exchange Commission has also signaled its intent to clarify a framework for stablecoins and decentralized finance (DeFi).

For digital assets to truly cement their place in the mainstream and the portfolios of investors across the globe, they must be subject to the same rigorous ESG standards that every government and corporation should now address. Significantly, the industry has gradually come to terms with this need and has ramped up a process of environmental self-regulation in response to rising adoption.

Organizations such as the Bitcoin Mining Council are working to increase transparency in the industry through higher reporting standards. Many crypto-native organizations are also joining the Crypto Climate Accord, committing to achieve net-zero emissions from electricity consumption associated with crypto-related operations by 2030.

Yet, for all this activity, perhaps the single greatest contribution to the energy efficiency of digital assets has been a decision entirely out of the control of the industry. In May, China’s State Council banned cryptocurrency mining and trading. Previously the global stronghold for crypto mining activity, with 44% of the global share of Bitcoin mining hashrate, the decision prompted an exodus of miners to other jurisdictions.

The move has been a significant one for the energy efficiency of the Bitcoin mining industry, moving away from the coal-heavy energy production of the Chinese economy to more renewable forms of energy in other jurisdictions.

North America has been the big beneficiary of this move, with the U.S. share of mining hashrate increasing from 17% in April to 35% in August. With the addition of a 9.5% mining hashrate in Canada, North America now dominates the global mining hashrate with close to 50% of the global supply.

While energy production in the U.S. is diverse across states, the shift has been a significant boon to the sustainability of Bitcoin mining. The U.S. is replete with renewable energy sources; add to the mix the fact that large mining companies are essentially competing in a low-margin industry, where the primary variable cost is energy, and the incentive is to migrate to the cheapest sources of power — which are largely renewable.

For example, New York — one of the states with the largest share of Bitcoin hashrate, according to data from Foundry USA — draws a third of its in-state energy generation from renewable sources. Texas, another significant state for Bitcoin mining hashrate, is rapidly growing its share of renewable energy production, with 20% of its power coming from wind in 2019.

In addition, the Bitcoin mining industry has a unique feature set that actually incentivizes the use of trapped sources of renewable energy that are not yet connected to the national grid. By acting as a means of monetizing the production of renewable energy, mining can thus further accelerate the building out of renewable energy capabilities.

This shift toward renewable energy sources has already begun to demonstrate to critics that Bitcoin and the wider digital asset industry can succeed with an ethos of sustainability. Such a transition will not be an instantaneous one, and it will take time for large mining operations to reestablish themselves in new jurisdictions. However, this transition is firmly underway.

Ultimately, it is up to digital asset service providers to demonstrate the value that crypto provides is worth its consumption of energy. Significant progress has been made this year alone in reducing the carbon footprint of digital assets, and as crypto continues its sustainability journey, corporate and institutional adoption will follow suit.