Unchained - Unconfirmed: Why This Environmentalist Doesn’t Blame Creators for the Carbon Footprint of NFTs - Ep.219

Starting point is 00:00:03 Hi, everyone. Welcome to Unconfirmed, the show that reveals how the marquee names in crypto are reacting to the week's top headlines and gets the insights keep on what they see on the horizon. I'm your host, Laura Shin, a journalist with over two decades of experience. I started covering crypto five years ago and as a senior editor at Forbes was the first mainstream media reporter to cover cryptocurrency full-time. Unchained and Unconfirmed right now published his videos. If you're not yet subscribed to the Unchained YouTube channel, head to YouTube.com slash C slash Unchained podcast and subscribe today. The crypto.com app pays you up to 8.5% interest on your Bitcoin. Get $25 when you download the crypto.com app with code Laura. The link is in the description. Today's guest is Brendan McGill, co-founder of Offsetra and Carbin.Fii. Welcome, Brendan. Hey, thanks for having me. Since I run a crypto show, it's a bit unusual for me to have a guest from the environmental world.

Starting point is 00:01:00 So, Brendan, why don't you tell us a bit about yourself? the sites you founded and how they intersect with crypto? I've actually got kind of a strange background. So my academic backgrounds in environmental studies for my bachelor's, got a master's in environmental governance a couple of years ago. And that's where I actually met some of the co-founders of Offsetra. But in the last couple of years, I've gotten really heavy into coding, web development, building tools and products.

Starting point is 00:01:29 And so that's where all my energy has really been. and this whole crypto thing really took off for us in the last, I want to say, three months. We've all been kind of watching the crypto space and, you know, dabbled in trading and some of my colleagues that bought some NFTs. And we've been excited by it. But then we really saw the connection between energy consumption and what we're interested in, which is climate change, carbon offsetting, things like that. And so we set out to create some tools and see what we could do. We made carbon FYI. We launched a prototype a couple weeks ago.

Starting point is 00:02:10 And essentially what it is, it's a tool that lets you put in an Ethereum address and then see how much carbon emissions are associated with that address. And it's been pretty crazy the last couple of weeks. We're getting a lot more shares than we ever expected, a lot more questions. People are reaching out to us, and it's been really fun. And can I ask how many queries you're getting a day roughly or what the growth has been in that? I think yesterday we were pushing like 600 page views. So I know in the internet scale, that's small, but it's huge for us. And we're actually seeing a lot of people offsetting as well, which we feel really good about. We could talk more about that later, I guess.

Starting point is 00:02:50 That's interesting. I mean, to be honest, as I watch the crypto community and there, feelings around the environmental issue. It seems, you know, a lot of people tend to be kind of like more defensive or, you know, they say, oh, it's using renewable energy and things like that. So it doesn't surprise me, frankly, that the numbers are small because I think a lot of them maybe would rather not think about it or they think it's not a problem. But so why don't we talk about the NFT issue? I'm sure listeners will know that there's this huge craze around non-fungible tokens or NFTs with everyone from Kings of Leon to Grimes to Taco Bell to the NBA minting NFTs and selling them to fans. But now we're kind of getting

Starting point is 00:03:41 a lot of normies who are also interested in NFTs. I mean non-crypto folks. And along with that came this backlash where on Monday, Art Station and online art platform announced an NFT program, but they had to cancel it within hours due to objections over the environmental impact. So, Brendan, do you want to maybe describe a little bit more what happened with the Art Station and, you know, your sense of whether these people were right to object, you know, what exactly are the, what exactly is the environmental impact of NFTs, like just how bad is it? The whole thing happened so quickly. So I think Art Station heard about offset you through our calculator and they actually reached

Starting point is 00:04:24 out to us, and they had been working on this prototype. For those who don't know, our station is like, I think they brand themselves as like a portfolio tool or platform for artists to publish their art and share it with the world. And so they wanted to expand that and offer NFT minting on the Ethereum blockchain. And I assume they've been working on this for a long time, but they reached out to us pretty last minute right before their launch and thought we would make a good partner. They saw some of the partnerships we've done with other artists and platforms. and thought. It's a good way to address the concerns people have with the carbon footprinting,

Starting point is 00:05:01 thanks to calculators like ours. So they made their announcement, and we were excited, but Twitter wasn't. And there was kind of a pretty heavy backlash. We could talk about where I think that's really coming from, whether or not it's warranted. There's been a lot of discussion going on. I mean, I would like to hear it. Yeah. Where is it coming from? and do you think it is warranted? Like, yeah, I would like to know some numbers around the environmental impacts of NFTs. There's one other calculator that's been being shared,

Starting point is 00:05:34 even more than ours. If we're getting like 600 hits a day, they must be getting several thousand. And especially in the NFT community, it's cryptoart.wtf made by an artist named Memo Actin, I believe I would say pronounce it. And his calculators focus specifically on NFTs. And the thing about NFTs is they consume quite a bit more gas than your average Ethereum transaction.

Starting point is 00:06:02 So the act of minting an NFT is pretty expensive in terms of Ethereum gas. And we derive our carbon footprint from that gas number. So the grand total is actually pretty shocking. It's like 10 times more than your average transaction. So I think people are seeing numbers like 700 kilowatt. hours. Which is equivalent to what? I wish I had the numbers written down. I want to say we're talking half a ton of carbon. Okay, here's a good comparison. We're seeing numbers like air miles traveled on the order of hundreds. We're seeing some contracts. If you put in a contract, you'll see it would

Starting point is 00:06:46 take the average European like several years worth of carbon emissions to reach those numbers. So people are shocked by that. But there's some kind of misconceptions that I want to clear up. I think people, when they see those numbers, they assume that the act of minting that NFT sort of directly burned that energy and directly emitted that carbon. But one thing I've been trying to really help people understand

Starting point is 00:07:12 is that isn't the case. And what the point of our calculators are to assign responsibility for emissions, but it doesn't necessarily tell us what the solutions are in terms of actually reducing emissions. When you say that that's not actually the case that what the calculator says is being emitted is what is actually emitted, why is that? Is it that there are certain assumptions that are made or is it that you don't know what the kind of renewable energy mixes of the electricity that was used? What accounts for that? I think you have to kind of start from the beginning at where the emissions come from.

Starting point is 00:07:49 So they really come from mining. And mining is, you know, people plugging in their computers and solving the proof of work algorithm. And that computation, the proof of work computation, it happens regardless of what is in the block, regardless of what transactions are happening in the network. And you think of it, if you were a miner, your decision to plug in your computer or not really doesn't have anything to do with who's minting NFTs. It has to do with the price of Ethereum. and a speculative future value of it, you know, do I think this asset is going to increase in value in the next years or whatever?

Starting point is 00:08:27 So people are forming the connection between, you know, their share of emissions, which we've calculated by dividing the total network emissions and then allocating them to users, you know, the people who benefit from the network. But they're extrapolating that. I think it's an easy mistake to make. And they think, you know, if I don't admit this NFT, then I won't admit these emissions. I think this ties back into the backlash that we saw with ArtStation. People thought that Art Station offering the service to their users was going to, you know,

Starting point is 00:09:00 dramatically increase the amount of carbon emissions being put out for each NFT. But that really isn't the case. And I think that we at least at least I would like to distance myself from that sort of narrative that people are pushing, You know, especially shaming artists who are publishing NFTs on Ethereum or other proof of work blockchains. You know, shaming the developers who are building on these blockchains, I don't think that's the right approach. And I don't think that's going to reduce emissions. So in a moment, we'll dive a little bit more into what exactly those numbers represent. But first, a quick word from the sponsors who make this show possible.

Starting point is 00:09:39 With over 10 million users, crypto.com is the easiest place to buy and sell over 90 cryptocurrencies. Grow your crypto with crypto.com earn, which pays up to 8.5% interest on your Bitcoin and 14% interest on your staple coins. When it's time to spend your crypto, nothing beats the crypto.com visa card, which pays you up to 8% back instantly and gives you 100% rebates for your Netflix, Spotify, and Amazon Prime subscriptions. Download the crypto.com app now and get $25 by using the code Laura. The link is in the description. back to my conversation with Brendan McGill. So just so I understand what you're saying is that the miners will produce new blocks on the blockchain no matter what. And so the environmental impact will happen no matter what. However, I think can't the point be made that the more that you create NFTs, the more of that block space will be allocated to NFTs and the more of that block space will be allocated to NFTs.

Starting point is 00:10:44 that will crowd out other transactions that might have happened. In that sense, it is producing emissions, right? So I don't know if I fully understand what nuance you're making there. Because if there's a finite amount of block space in every block, then the more one thing crowns out another, like, yeah, just kind of the more stuff will be filling every single block. Yeah, absolutely. I mean, there is a connection.

Starting point is 00:11:16 I should clarify that. There's definitely a connection between you, the mentor of an NFT or the transactor on the Ethereum blockchain, and demand for the token, which increases its value, and then the incentive for mining. And the other connection there, aside from the value of Ethereum, is the block reward that miners get. A portion of that comes straight from gas fees.

Starting point is 00:11:42 So, of course, if you have more and more people minting NFTs and the blocks are so crowded that gas fees are shooting up, which we've been seeing all year, then there's more incentive to mine. And so more miners join the network. But again, the reason I'm so focused on these nuances up front, because I don't think that necessarily means we should be attacking artists and developers for using these tools. and I especially don't want people to think that that's going to be productive and that's going to reduce emissions. And the reason for that is NFTs are a really small portion of all transactions. Even though they're expensive transactions, they're a really tiny portion. I don't know, several percent at most, like three percent at most from the numbers I've seen. The demand is coming from trading and speculators and I assume the defy explosion has something to do with it.

Starting point is 00:12:38 So this obsession with, and maybe again, this only exists on Twitter or like a really vocal minority of people, but this backlash was really unfair, I felt like. And I did feel a little bit responsible for that. And I've been in a lot of discussions with memo and, you know, talking about the language he uses on his calculator. Because we want people to understand that, yes, this is your share of emissions as a benefactor, you know, this energy is being burned. by minors, but that doesn't mean we should assign minors the burden of emissions, right? Everyone should really pay a fair share if they can, especially when you're talking about offsetting emissions or, you know, offsetting historical emissions. So that's sort of the rationale there. And there's this distinction. I want people to understand, you know, we can talk about solutions, which is decarbonizing proof of work or moving to proof of stake. But I

Starting point is 00:13:38 I think attacking artists and attacking developers like ArtStation, projects like ArtStation, is not productive. So I'm glad I have the chance to say my piece on that here. Yeah, it's a surprising stance from somebody who created Offsetra and Carbond.fyeii. But I understand where you're coming from, given what you've just said. So one other thing I was curious about is, and this is something I have been trying to figure out, I feel like for quite a while. Is it possible to calculate how much of the energy that miners use comes from clean energy versus something like coal or something that's less environmentally friendly?

Starting point is 00:14:17 It's really difficult to do. And so there's big assumptions written into any study or any calculator out there, including ours. We make sure to highlight those in our methodology documents. So we don't really, you know, we see a lot of articles on cryptocurrency. news outlets that are saying that the majority, they think the majority of energy use for mining is renewable. And we haven't seen any evidence for that. I mean, the best numbers we've seen are 70% is fossil fuels. And one thing we've done that no other calculator has done is we've tried to look at every single mining pool and look at their geographic location and then figure out

Starting point is 00:15:00 the energy mix of that area. So there's still some generalizations in there. Like I think about 50% of mining pools, we can't really pin down. Or it wouldn't be fair to stay there in a given location. So we use global average energy mix for those. And then we try to be conservative as well with our assumptions. Wait, meaning toward the side of using like less clean energy, you mean? or more clean?

Starting point is 00:15:31 Yeah, towards the assumption that fossil fuels tend to be the cheapest. And so we think it's, if we're not sure, well, it's probably fossil fuels. Okay. I would clarify, I think people should read our methodology. We go into a lot more depth in that. And I've only played a small part in that, establishing that methodology. So I hope I'm not messing up, making my colleagues mad right now. Okay.

Starting point is 00:15:58 Well, clearly, I think that this is going to be an even bigger issue, I would say, going forward. So I'm sure there will be plenty more discussion around methodologies and basically what the facts are. This is, as I said, something I've been trying to figure out for a while. There's this movement to creating kind of like clean NFTs. What are the methods that people are interested in in that community? Are they mostly just interested in switching away from proof of work blockchains or do they have other ideas around how to create clean NFTs? Yeah, that's been a really fun discussion. We've been really involved in that.

Starting point is 00:16:40 There's been a Discord server that popped up. I don't know who were the original creators were. I know an artist named Situ's been heavily involved in a bunch of others. And it's blown up to like over 1,000 users in just a couple weeks. And so that's where we're having these discussions, like what can we actually do as artists, as creators, as developers? And I'm seeing kind of two real paths forward. The first is... The scorebed app here with trusted stats and real-time sports news.

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Starting point is 00:18:17 telling the stories that matter to all of us, because local news is big news. Choose news, not noise. CBC News. it's for artists who regardless of the actual relationship between them and emissions, they don't feel comfortable being associated with that sort of proof of work, energy consumption. So they're saying, I don't want to be a part of this, you know, even if it makes no difference whether I come or go.

Starting point is 00:18:45 I don't want that tied to my art and it's not my message. And so they're looking for proof of stake platforms. And there's been some awesome work memos put together a really nice guide, which you can find through his calculator that lists all the kind of options that are out there. Wait, which calculator is this? The cryptoart.wtf calculator, yeah. So he's got a really nice guy that artists have found really helpful. And we're seeing more and more artists start to mint on those alternative platforms.

Starting point is 00:19:16 There was some hesitation because Ethereum is kind of where it's happening right now. And, you know, NFTs are forever. So there's some concern if I'm an artist and I'm publishing on a platform. platform that's unproven or that no one's using. Well, my art's probably not going to sell for as high of a price. And, you know, what happens when Ethereum 2 comes out and goes proof of stake? Now is my NFT going to be worthless? Well, those are at risk that some artists are willing to take and I really respect that. So they're sort of paving this path forward. And on the other hand, there's a lot of people who aren't willing to take those risks and they're staying with

Starting point is 00:19:55 Ethereum, even despite the association that's going on with energy consumption. So with them, we've been really excited about the opportunity to offset emissions. So we've been doing partnerships with artists who are publishing on Ethereum and they're making up for their impact, but they're also making up like hundreds of times over. So really raising serious money for pro-climate projects. And we've offset one artist, a guy really started at all of this, Sven Ibrine. He offset like a thousand tons embedded it in an NFT and sold it. Just day before yesterday, Trevor Jones

Starting point is 00:20:30 offset 600 tons as part of this ongoing project he's been doing. And just for reference, that's there, I think it's 35,000 Ethereum transactions offset. So, you know, really covering their impact

Starting point is 00:20:46 and more. And when you say 35,000 Ethereum transactions offset, that was all what was contained within that artwork? Right. So 600 tons would cover for the emissions associated with 35,000 transactions. Wow. And earlier when you were talking about the proof of stake blockchains that some artists are choosing to go to, which ones are they tending to pick? I've been seeing a lot of, I can't even pronounce it's a Latin word. Hedge-Echnunk, I think it's pronounced. I don't even know this one.

Starting point is 00:21:21 I'm going to have to leak in. I've never heard of it either until recently. But they've been making some sales on there. Just a quick note to say here that Brendan messaged after we recorded to say that he misspoke that Hick et Nunk is not a blockchain, but actually an NFT platform on the Tazos blockchain. I'm not super into the NFT and art world. So I think I'd have to defer you and your listeners to the to the guides that memo has posted. Okay. I will link to all that in the show notes. And I'll look up. this blockchain. And I mean, I guess, you know, I know, so obviously NBA Top Shot is on flow, which is a proof of stake network. Is that something that, you know, these artists,

Starting point is 00:22:06 these artists interested in NFTs are interested in? I couldn't say. I really couldn't, you know. I was kind of sucked into this NFT world without wanting to be. It's been awesome. But, yeah, I don't want to speak on behalf of artists. There's some awesome conversations going on. and people are really taking it upon themselves and figure out, like, what's the best path? All right. Okay. Well, clearly there is more to be mind here. Excuse the pun. Yeah. All right. Well, thank you so much for coming on Unconfirmed. Sure. Thanks for having me. Don't forget. Next up is the weekly news recap. Heads up, everyone. Before we get into the news recap, I wanted to mention that when we did the show last month, all about crypto taxes for 2020,

Starting point is 00:22:53 I asked about taxes on NFTs, but I asked only about NFTs for creators. I neglected to ask about taxes on NFTs for investors. I reached back out to one of our guests, Sheehan Chudder Secre, of CoinTracker, who graciously wrote up a quick explanation of how NFTs get taxed for NFT investors. To briefly recap how NFT creators get taxed, he writes, quote, creators get taxed at the time they sell NFTs. Say Sam created an NFT artwork and sold it for two ETH,

Starting point is 00:23:22 valued at $2,000. He would report $2,000 as ordinary income. If he's in the business of creating NFTs, he can also deduct business-related expenses to reduce the tax bill. And so as for NFT investors, this is what Sheehan had to say about how they'll be taxed. Investors are individuals who buy and sell NFTs for speculative purposes. Most people fall into this category. For investors, taxes work very similar to crypto trading. There's a taxable event whenever you sell an into cash or another cryptocurrency. Profits are subject to capital gains tax rules. Say Sally purchased an NFT for two ETH, worth $4,000 in January 2021. If she would sell this NFT for $10,000 in March 2021, with a holding period of less than 12 months, she would have a short-term capital gain of $6,000,

Starting point is 00:24:15 and this $6,000 would be subject to her ordinary income tax rate. If she were to sell this NFT for $10,000 after holding it for more than 12 months, say in March 22, the profit of $6,000 would be subject to more favorable long-term capital gains tax rates. One interesting item to know is that some NFTs could fall under the definition of collectibles under the IRS rules. The maximum long-term capital gains tax rate for collectibles is 28%. The maximum long-term capital gains for crypto-s slash non-collectable NFTs is 20%. All right, now time for the news recap. First headline. Christie's Auction House sells an NFT for $69 million.

Starting point is 00:25:01 On Thursday, a digital artwork representing the first 5,000 days of digital art created by artist Mike Winkleman, aka Beeple, was sold for $60.25 million at Christies in New York. With the buyer's premium for purchasing an ETH, the total comes out to $69 million. In case you missed it, be sure to check out the unconfirmed episode. with Mike last fall when he first made $3.5 million from his digital art. Crypto Twitter was aghast when it first thought that Justin Sun, the founder of Tron, was the buyer. Blockchain consultant Maya Zahavi tweeted, Why did it have to be Justin's son?

Starting point is 00:25:40 It's way too predictable and in the worst way possible. However, the story took a turn later when CoinDesk reported that Justin Sun was actually not the winning bidder. When I tweeted about this, Oli Chan tweeted back at me, Craig Wright has entered the chat. Another good guess was from a Twitter user named Mike with the handle 4KTV, who suggested Chimoth Paula Hepatia, the billionaire, was the buyer. I guess we will find out later.

Starting point is 00:26:08 The bidding for every days, the first 5,000 days, a mosaic of every image that Winkleman has made since 2013, opened at $100 on February 25th, and was pushed to $1 million in under 20 minutes, with only three of the bidders previously known to Christie's. An hour before the sale closed, the online bids were sitting at around $14 million, until they jumped from $22 million to $35 million before closing at a startling $60.25 million in a sale that is nearly unprecedented in modern auction history. Every Days is now the third most expensive artwork sold by a living artist in auction.

Starting point is 00:26:48 thanks in large part to a group of bidders using magic internet money. Jack Dorsey is auctioning off his Genesis tweet, quote, just setting up my Twitter from March 21st, 2006, via the Ethereum platform valuables. The latest bid sits at $2.5 million. Dorsey announced that he will convert all proceeds to Bitcoin and promptly donate to give directly as part of its Africa response program. Cryptopunk number 7804 sold for 4200 Eth, which converts to $7.56 million this week,

Starting point is 00:27:27 blowing the previous highest amount paid for a Cryptopunk out of the water at a mere 800 Eath. Last week, a Banksy piece was purchased, burned on a live stream, and then digitally resurrected as an NFT. This week, that artwork titled Morons sold for a 229th, which is $382,000. Taco Bell dropped five talk collectibles on rareable this week and those sold out in minutes.

Starting point is 00:27:57 And lastly, a 16c crypto is investing $20 million in NFT marketplace OpenC. Certainly looks like a good time for anybody in this space to get investment. All right, next headline. Investors continue to pour money

Starting point is 00:28:13 into crypto firms. Crypto lender BlockFi announced a series D funding round of $350 million, valuing the firm at $3 billion. With $10 billion in outstanding loans and profitable operations, Zach Prince, BlockFi's chief executive officer, said, quote, we are interested in becoming a public company. The latest rent of funding means that BlockFi has raised more than $450 million in venture capital. NYDIG, the Bitcoin subsidiary of Stone Ridge, known for getting insurance company Mass Mutual, to allocate capital Bitcoin, announced a $200 million growth round led by Morgan Stanley, Soros Fund

Starting point is 00:28:50 Management, Mass Mutual, and New York Life, amongst others. NYDIG will be working with its investors to explore Bitcoin-centric initiatives and expects, quote, an explosion of innovation in Bitcoin products and services, Robert Gutman, NYDIG, CIO, said in a press release on Monday. In other news, PayPal confirmed the purchase of Curve, a provider of cloud-based infrastructure, as the payment company's first acquisition in the crypto industry. Curve will join the newly formed crypto-focused business unit that PayPal recently created. Next headline. More ways to get exposure to Bitcoin in the capital markets.

Starting point is 00:29:27 T.P. Morgan is looking to offer clients a way to invest in crypto through structured notes linked to cryptocurrency-focused companies. The JP Morgan cryptocurrency exposure basket will hold 11 stocks, including a 20% stake in micro strategy, and 18% waiting for square, and a 15% allocation for both riot blockchain and shipmaker and Vidia. The basket, curiously, does not include Tesla stock and will also not contain crypto assets directly. In a similar move, the Simplify U.S. equity plus Bitcoin ETF is looking to provide a workaround to the SEC's reluctance to approve a straightforward Bitcoin ETF. According to the SEC, the new fund would invest up to 50% of its overall holdings into cryptocurrency indirectly via the Grayscale Bitcoin Trust. If approved, the ETF would trade under the

Starting point is 00:30:15 ticker SPBC and be administered by BNY Mellon. Grayscale, the world's largest digital asset management firm, posted nine new job openings this week, strongly suggesting the trust company is positioning itself to launch an ETF. The vacant listings consistently reference an ETF business, but do not specify which assets the ETF will include. The ETF-related job openings come during a period where both the Grayscale Bitcoin Trust and Ethereum Trust are trading at a discount to the price of the underlying assets. Grayscale has roughly $36 million in assets under management. On Thursday, crypto investment company coin shares began trading on the NASDAQ first North Growth Market, an alternative stock exchange for smaller companies in Europe

Starting point is 00:31:01 under the ticker CS. The IPO was oversubscribed by 400%, totaling $80 million in raised funds and bringing aboard 2,280 new shareholders. Norwegian oil and gas company Akera announced a new unit dedicated to investing in Bitcoin and Bitcoin-related projects. The new company, CT, plans to keep its liquid assets in Bitcoin, establish mining operations to better utilize stranded wind, solar, and hydropower, and invest in projects within the Bitcoin ecosystem. CT will partner with Blockstream to accelerate the use of renewable energy used in Bitcoin

Starting point is 00:31:38 mining. In a tweet highlighting some choice quotes from the acre letter, Alex Glassstein, chief strategy officer of the human rights foundation, said he thinks the acre announcement is a, quote, major step toward more Scandinavian Bitcoin plus adoption. Next headline. Ethereum Improvement Proposal 1559 to be implemented in July. Ethereum Improvement Proposal 1559, which could turn ether into a deflationary asset, has been accepted in an Ethereum Network. upgrade and will go live in conjunction with the London hard fork this coming July or August. The proposal will change blockchain transactions on Ethereum so that a portion of the gas fee is burned in each transaction, potentially reducing the total supply of ETH.

Starting point is 00:32:23 While EIP-159 may sound exciting for ETH holders and application builders, a majority of Ethereum minors, reportedly over 60% of the network's hash power, oppose EIP-159, as it effectively reduces minor revenue stream. Miners, however, have few options to stop EIP-1559 outside of a hostile 51% attack, which is a highly unlikely attack vector given the lack of economic incentives now that the proposal is approved. The reduction in minor compensation may lead to a rise in the implementation of minor extractable value software, which takes advantage of a minor's ability to front-run trades and the block it is currently securing. Given miners' opposition, it will be interesting to see how the Ethereum community

Starting point is 00:33:08 handles the contentious proposal. Though Deripic crypto researcher Hasu thinks that EIP 1559 will not be the issue that forces miners to fork the network. He tweeted, quote, miners will 100% fork Ethereum, but not for EIP 1559. They have one bullet and they need to save it for the end of proof of work mining. Next headline. New crypto bills could give Dow's and tokens new life. On Tuesday, the Wyoming State Senate approved legislation that would recognize decentralized autonomous organizations as companies. It will become law if passed by the Wyoming House of Representatives, the bill would allow Dow's to set up in Wyoming and further bolster the state's reputation as a blockchain friendly jurisdiction. Erin Wright, a professor at Cardozo Law in New York, believes the bill is a

Starting point is 00:33:57 huge step forward, tweeting, setting up a legally recognized Dow could cost hundreds of dollars instead of tens of thousands of dollars, and this should, quote, let millions, if not billions of Dow's bloom. Preston Byrne, a partner at Anderson Kill Law, strongly disagreed, stating, quote, the Wyoming Dow Bill is slack-jawed stupidity, and that, quote, our laws already have concepts that cover algorithmically driven DAOs and their members, unincorporated associations and partnerships. Gabriel Shapiro, a partner at BSV law, seconded in Byrne's opinion, tweeting that the bill, quote, is a material step backward for LLC-based DAOs because it imposes additional regulations on them that have never existed before. Meanwhile, the CFTC and SEC are working with Congress

Starting point is 00:34:43 to clarify jurisdiction on different types of cryptocurrencies and tokens. A bipartisan piece of legislation called the Eliminate Barriers to Innovation Act of 2021 introduced Tuesday seeks to define the parameters for digital asset securities, in which case the SEC would have jurisdiction over securities and digital asset commodities in which case that the CFTC would have jurisdiction. The bill would create a working group composed of SEC and CFTC representatives that would look at issues such as how the current regulations impact the U.S.'s competitive position, as well as issues around custody, private key management, fraud, and investor protection. Additionally, the Token Taxonomy Act was reintroduced by Representative Warren Davidson on Wednesday, aiming to exempt certain digital assets from

Starting point is 00:35:29 federal securities law by amending the Securities Exchange Act of 1934. The Token Taxonomy Act is making its third pass through Congress after being introduced first in 2018 and again in 2019. Representative Davidson, who says he believes the U.S.'s opportunity to be a global leader in blockchain tech is closing, sees the Token Taxonomy Act as a way to mend the patchwork of laws and regulations that currently create confusion and sometimes hostility for various blockchain businesses. Next headline. Hacker token auction gets shut down. On Monday, Matthew Hickey of Hacker House leased a piece of highly collectible hacker artwork as an NFT. The token contains data that would allow the purchaser

Starting point is 00:36:12 to exploit code that would cause a denial of service error in the 28 games that use free game software called IOCQAWK3. Hickey describes this concept as a proof of concept exploit, redeemable as an NFT. In an interesting decision for an application housed on a decentralized network, OpenC promptly took the listing down after it was posted. The hacker token, however, still exists in Hickey's wallet. Speaking of hacks, Open Zeppelin, a cryptocurrency software and security firm, released a software suite called Defender that will give DeFi teams real-time alerts and automated scripts in response to flash loan attacks. Flash loans have been one of the most common tools for hacking defy applications, resulting in $150 million in losses since

Starting point is 00:36:57 2020. The key to Defender is a set of automated responses that allows the smart contract to be paused or upgraded quickly. Defender cannot prevent flash loan attacks from occurring, but it can be used to stop the exploit before the hacker can make off with a large number of coins. Time for FunBits. Grants for Roll-ups. The Theorem Foundation is sponsoring a wave of roll-up community grants due April 16th to help kickstart development on Layer 2 scaling solutions. Anyone is free to participate. All the application requires is an idea and a passion for building, along with a high-level understanding of optimistic roll-ups. Some items on the Ethereum Foundation's wish list include making it easier for devs to deploy daps on roll-ups, enabling interactions between

Starting point is 00:37:43 roll-ups, and establishing roll-up standards. Again, the deadline is April 16th for any developers interested in submitting a proposal. Second fun bits, Crypto on Tim Ferriss. Popular author and podcast host, Tim Ferriss, has recently published two crypto-related shows. This week, he had on Vatollic Buderan and Val Ravacan to discuss Ethereum, scaling plans, NFTs, and more. One of the more interesting moments of the show was when Vatolic said he thought there was some chance that some members of the Ethereum community, such as miners and perhaps some people who don't want to take the risks of moving over to a proof-of-stake platform, will stay on Ethereum 1 instead of moving over to Ethereum 2. Also, in February, Tim interviewed Catherine Hahn, general partner at A16Crypto,

Starting point is 00:38:32 but her time prosecuting crimes involving the dark web and some rogue federal agents, plus she discusses NFTs in a highly accessible way to a mainstream audience. I very much recommend both shows and think that Tim is doing a great job introducing crypto to his mainstream audience. All right. Well, thanks for tuning in to learn more about Brendan, Offsetra. and Carbon. FYI, be sure to check out the links in the show notes. Don't forget, we are now on YouTube, subscribe to the Unchained Podcasts YouTube channel today. Unconfirmed is produced by me, Laura Shin, without from Anthony Yoon, Mark Murdoch, Daniel Ness, and Dan Edelbeck. Thanks for listening.

Unchained - Unconfirmed: Why This Environmentalist Doesn’t Blame Creators for the Carbon Footprint of NFTs - Ep.219

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