Foundation/Cryptocurrency Donations

Summary: this wiki page provides an overview of activities related to Mozilla Foundation’s 2022 review of its cryptocurrency donations policy.

Q2 2022 Update

Earlier this year we committed to a review of our cryptocurrency donation policy. We took actions at the end of Q1 to pause and assess our cryptocurrency donation policy, and committed to a further update at the end of Q2.

Cryptocurrency has been in the news a lot lately. Since our last update, many of the major cryptocurrencies have seen significant declines. And, partners like Wikimedia have announced that they will no longer accept cryptocurrency donations.

Over the course of Q2, our fundraising team has looked into implementing a policy that would see us only accept proof-of-stake cryptocurrencies. At this time, our vendor doesn’t offer a service that distinguishes between types of cryptocurrencies. Coupling that with the increased volatility, we’ve made the decision to continue to hold on accepting any cryptocurrencies until further notice.

MoCo is continuing to explore opportunities in this space broadly, and this doesn’t preclude us from keeping the door open to greener cryptocurrency projects in the future. But, for now, our donations policy is not the place to do it.

Last edited: June 27, 2022

Q1 2022 Update

As of April 2022, the Mozilla Foundation are updating our donation policy to:

1. no longer accept proof-of-work cryptocurrencies, as their design requires increasing amounts of energy over time;
2. accept cryptocurrencies that use technologies like proof-of-stake that are designed to use less energy.

We will develop an implementation plan including a list of cryptocurrencies we will accept by the end of Q2 2022. This wiki provides a summary of the decision, the history of the review, and more details on next steps.

Overview

Mozilla Foundation has been accepting cryptocurrency donations since 2014. In Q4 2021, Mozilla Foundation released a tweet requesting cryptocurrency donations as part of the regular end-of-year donation drive. This sparked a discussion online and internally regarding the environmental impact of cryptocurrencies, whether that fits within Mozilla’s mission and ethos, and the future of cryptocurrency donation at Mozilla. This conversation highlighted Mozilla’s need to assess the environmental impact of its cryptocurrency donations, especially in light of our climate commitments.

On January 6, 2022 Mozilla paused the ability to donate cryptocurrency and announced on Twitter that it will conduct a review and commit to a transparent process with regular updates. The Mozilla Foundation completed the review by the end of Q1 2022.

Context

While all cryptocurrencies -- and all computing -- use electricity and have an associated carbon impact, the level and impact is varied. The two main approaches to securely verifying cryptocurrency transactions on the blockchain have very different energy use patterns:

Proof-of-work: Proof-of-work cryptocurrencies like Bitcoin are energy-intensive by design. Validators (aka miners) use specialized hardware to verify transactions, essentially trading energy used by their hardware for tokens. “It’s a process called “proof of work,” in which the energy used is sort of the price paid to verify transactions. The process is deliberately energy-intensive as a safety measure. The baked-in inefficiency is meant to discourage bad actors from manipulating the data because it would cost a lot of energy to do so.”

Proof-of-stake: Conversely, proof-of-stake cryptocurrencies verify transactions through financial collateral. A miner ‘stakes’ their own tokens as proof that the transaction is accurate. Ethereum, which is currently running both proof-of-work and proof-of-stake chains in parallel, estimates that a shift to proof-of-stake would lower their energy consumption by 99%.

Decision

Our cryptocurrency donation policy review resulted in a decision for us to make a distinction between proof-of-work cryptocurrencies and cryptocurrencies using proof-of-stake and other approaches that use less energy by design.

More specifically:

1. Mozilla will no longer accept proof-of-work cryptocurrencies, which use increasing amounts of energy over time.

Related Mozilla climate commitment: Mozilla will significantly reduce its GHG footprint year over year aligning to, and aiming to exceed, the net zero emissions commitment of the Paris Climate Agreement.

Given the energy intensive nature of their design and technological process, accepting donations in proof-of-work cryptocurrencies has the potential to significantly increase our GHG footprint. While we currently do not receive very many cryptocurrency donations, almost all of the ones we do get use proof-of-work. We have decided not to accept proof-of-work donations in order to ensure that our fundraising activities remain aligned with our commitment to moving towards net zero emissions. This includes Layer 2 cryptocurrencies built on top of proof-of-work networks as they rely on the same underlying energy consumption patterns.

2. Mozilla will accept cryptocurrencies that use technologies like proof-of-stake that are designed to use less energy.

Related Mozilla climate commitment: Mozilla will explore approaches to develop, design, and improve products from a sustainability perspective, including seeking collaborations to further amplify impact.

In addition to making the above commitment to ourselves, and within our own products, we encourage others in the technology industry to develop more sustainable products. We see increasing use of less energy intensive methods of verifying blockchain transactions such as proof-of-stake as a positive development. While there are still questions and issues to be solved related to the evolution of cryptocurrency, we believe that accepting less energy intensive currencies is in line with our climate commitments. We also believe we can play a positive role in the industry by encouraging those cryptocurrencies that we do accept to be transparent about their energy consumption patterns.

Next Steps

In Q2 2022, we will develop an implementation plan including a list of cryptocurrencies we will accept as part of our fundraising. It will also include developing a method to highlight which of the cryptocurrencies we accept have provided transparent information about their energy consumption patterns.

Furthermore, Mozilla will:

• Address our historic climate responsibility from cryptocurrency donations received over the last three years. More specifically, Mozilla will use the social cost of carbon to set a budget to offset emissions from the last three years of cryptocurrency donations.
• Review our donations policy in the context of our climate commitments at a minimum each year and continue to publish what we learn. This will include a regular review of research on the state of energy consumption transparency practices by major cryptocurrencies.
• Explore the role that Mozilla’s movement-building strategy could play in encouraging more environmentally sustainable and socially beneficial approaches to cryptocurrency. This could increase openness and transparency in assessing the environmental impact of digital products and services and encourage the development of less energy-intensive transaction networks.

We will provide further updates on this wiki as they are available.

Archive

Decision Options

Decision Options (PDF), includes:

• Overview and orientation for the review
• Facts and Figures on cryptocurrency donations to Mozilla
• Decision options for the policy going forward

Based on the data from the review, a set of decision options were presented in the Mozilla Foundation monthly call on March 22, 2022 and in Slack channels on March 23.

Scope

The cryptocurrency donation review is an internal process within Mozilla. We also are making the documentation of the process open and transparent to the public.

The scope of the review is to inform a decision, to be made by the Mozilla Foundation’s Executive Director, about Mozilla’s cryptocurrency donations policy in light of our climate commitments. If significant deliberation is needed, then it will be discussed with the Board. We plan to publish the findings from our research as well as a summary of our analysis so that others may better understand the decision and build upon this work.

This cryptocurrency donation review is not scoped to cover other topics related to Mozilla product developments or policy decisions. Similarly, it is not intended to cover broader questions about what Mozilla may or may not explore in relation to decentralized web technology.

Creating a Brief

To inform the review, the Mozilla Foundation created a brief in January. These questions were developed in collaboration with Mozilla’s Environmental Champions, fundraising, and communications teams with input from other experts and stakeholders in our network and approved by the Foundation’s Executive Director.

Specifically, the Foundation is looking into:

• How much carbon has been emitted from the cryptocurrency donations we received so far?
• What are the projected cryptocurrency donations for Mozilla over the next 3 years, and how much would be emitted from them?
• How do the different types of cryptocurrencies we receive vary in terms of climate and environmental impacts?
• How do these historic and projected emissions affect our overall GHG accounting and Mozilla’s pledge for carbon neutrality and net zero emissions (Climate Commitment #1 and #2)?
• In addition to carbon emissions, what other climate and environmental factors should be considered in this policy?

Further Questions

The Foundation identified further questions to learn more about landscape and how to better incorporate our climate commitments into our decision-making process:

• How do other organizations of a comparable profile to Mozilla determine and evaluate their cryptocurrency donation policies?
• How should Mozilla openly share materials, tools, and methodologies for this accounting and review (Climate Commitment #3)?
• What other products and players at the intersection of climate and cryptocurrencies that Mozilla should review more closely (Climate Commitment #4)?

Timeline

• 2014-2018: Mozilla accepts Bitcoin through Coinbase.
• 2018: Mozilla switched from Coinbase to Bitpay and expanded the number of cryptocurrencies accepted as outlined on our wiki.
• December 27, 2021: Mozilla tweets about cryptocurrency donations as part of the regular end-of-year donation drive.
• January 6, 2022: Mozilla paused the ability to donate cryptocurrency and announced on Twitter that it will conduct a review and commit to a transparent process with regular updates.
• January 6: Mozilla Environmental Champions drafted a brief and process for a cryptocurrency review with input from Mozilla Fundraising and Communications.
• January 11: Approval of the brief by Mozilla’s ED.
• January 13: Request sent to sustainability consultants for expertise on cryptocurrency emissions calculations.
• January 13 - February 4: Desk research and structured conversations with experts and stakeholders on our staff and in our network.
• February 7: Refined brief based on initial findings and supporting documentation in development.
• February 17: Further research into cryptocurrency landscape and organizational benchmarking.
• February 24: Outreach to other sustainability consultants for support on emissions calculations.
• March 2: Interim presentation to Mozilla’s Executive Director.
• March 8: Update published to Mozilla wiki and in Slack.
• March 22: Present decision options at MoFo Monthly Meeting], noting that options may be limited if we don't yet have calculations from sustainability consultants.
• March 23: MoCo Fortnightlier Meeting including agenda item on decentralization.
• March 24: Cryptocurrency Donation Office Hours (LDAP’ed Mozillians)
• March 31: Assuming enough information is available, Mozilla Executive Director makes a decision based on options and publishes on this wiki.
• Q2 2022: Evaluation process in place to keep the policy current. Publish supporting documentation and findings as appropriate.

Discussion and Questions

If you would like to participate in this review or have questions, we invite you to use the Slack channel #environment or to attend the office hours and internal meetings.