Paypal’s crypto emissions now make up more than 15% of its carbon footprint

Paypal has managed to reduce its energy use and carbon footprint in recent years – but crypto emissions are creeping up.

The crypto assets held by Paypal on behalf of its customers more than doubled between 2022 and 2023, reaching US$1.2 billion. At the same time, the fintech’s crypto-related emissions went from 68,000 tonnes to 80,000 tonnes, even as its overall carbon footprint declined to 515,100 tonnes.

Between 2021 and 2023, the proportion of crypto-related emissions in Paypal’s carbon footprint went from less than 9% to more than 15%, and the company is now doubling down on efforts to make the crypto industry greener – including by looking for ways to incentivise low-carbon energy use by crypto miners.

“We believe that digital assets have the potential to increase financial access and economic opportunity globally (...) We’re actively researching and testing mechanisms to incentivise Bitcoin miners to use renewable energy sources in a way that accelerates decarbonisation while maintaining the decentralisation inherent to this new financial platform,” the fintech said in its latest impact report, published on May 7.  

Paypal’s crypto-related emissions are estimated through the hybrid emissions allocation method developed by the Crypto Carbon Rating Institute and South Pole in 2022, which considers both the value of a user’s crypto holdings and the transaction fees paid by the user.

The growing climate impact of crypto assets

Cryptocurrency mining is a very energy-intensive process due to its decentralised proof-of-work consensus mechanism. 

The Cambridge Bitcoin Electricity Consumption Index estimated annual greenhouse gas emissions of 61.38 million tonnes of CO2 equivalent last year from Bitcoin mining only, without accounting for the many other cryptocurrencies on the market. 

At a time when the world is racing to reduce emissions to net zero by 2050, the growing weight of crypto emissions is causing concern, leading the European Central Bank to consider policy responses. “Increasing financial exposures to such crypto-assets are likely to contribute to increased transition risk for the financial system,” the ECB wrote last year.

Paypal sustainability targets and progress

Paypal, which reported annual revenues of US$29.77 billion in 2023, has cut Scope 1 and 2 emissions by 75% from its 2019 baseline, mostly by matching 89% of its total energy use (and 100% of its data centre’s energy use) with renewable generation sources. As such, the company is more than on track to meet its science-based target of 25% reduction by 2025, despite a slight year-on-year increase in 2023 “due to increased energy consumption in regions with limited renewable energy sources”.

Last year, an overall reduction in office square footage and the consolidation of its US data centre operations helped it decrease energy use by 6%. 

Paypal’s near-term Scope 3 absolute reduction target only includes fuel and energy-related activities, (9,000 tonnes in 2023), and there the company has already met its 25% reduction goal.

At the same time, Paypal also has an SBTi-approved goal of sourcing 75% of its goods and services by spend from suppliers with science-based carbon reduction targets. In 2023, the proportion of providers with climate goals stood at 45%.