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This week on The Bit, we’re joined by Matthew Pickup and Ethan Gilmore of the Carbon Utility Token team, an ambitious blockchain project that allows companies and individuals to track and monitor their carbon footprints. The Carbon Utility Token, or CUT, was recently listed on Bittrex Global.

Here are the show notes:

[01:33] My First Bitcoin
[04:28] Offsetting Emissions
[11:04] CUTting Into Carbon
[18:53] The CUT Vision
[24:13] Stronger in Numbers

Stephen: Hi, welcome to The Bit, the Bittrex Global podcast where we give you the inside scoop on all things crypto. I’m Stephen Stonberg, the COO and CFO of Bittrex Global. 

Welcome to today’s episode of The Bit, where we sit with some of the hottest names in crypto to give you an insider’s perspective on the fast moving world of cryptocurrency. 

It’s undeniable that in the coming years, the world will face a bigger challenge than coronavirus. And that’s the compounding effects of climate change. We’re already seeing some of the effects of climate change with more powerful hurricanes, winter storms, and horrible heat waves. Climate change is primarily caused by the emission of greenhouse gases. 

These are gases like carbon dioxide (or CO2), methane, or ozone that are emitted from your car, electricity production, Bitcoin production, and even agricultural activities. CO2 is by far the largest greenhouse gas emitted, making up more than 80% of all greenhouse gases released into the atmosphere. So it’s safe to say, we need solutions to reduce CO2 emissions and offset the CO2 emissions in our daily lives. 

Today, I’m excited to have Ethan Gilmore and Matthew Pickup from the Carbon Utility Token team, or CUT token team, who are working to create one of the first tokens that helps people and businesses offset their carbon footprint. So without further ado, welcome Ethan and Matthew.

Matthew: Right on. Thanks a lot, Stephen.

Ethan: Thanks for having us.

[01:33] My First Bitcoin

Stephen: Well, it’s a real pleasure. And I think before we dive into it, what’s interesting to note, I mean, Bitcoin and crypto itself is pretty polluting because it’s one of the biggest users of electricity on planet Earth. So we’re not really the most green industry. So I think there’s probably a lot of applications within crypto for this token, ironically. 

And I think what’s also of note, you’ve put your project, you’ve issued it out of Liechtenstein, which is one of the most eco friendly countries on Earth. 

So I think the first question I have, and before we jump into learning more about CUT, we always ask our guests this question. Who got you interested in crypto? And how did you buy your first Bitcoin?

Matthew: I could take a stab at that one. I was working in fundraising for startups helping SMEs and other people raise money through renewables and tech projects. And I kept coming across these couple of companies who were inserting a blockchain and learning a bit more about their plans. And all of a sudden, they’re sending me Google links about ICOs and all the money flooding into these projects. And it really got me hooked, just kind of learning more and going down the rabbit holes of all the YouTube explainers and everything. 

And what really sucked me in was the Ethereum community. There’s just…I mean, Vitalik himself and the founders are so interesting, but the kind of projects that they were building and what they were trying to do, smart contracts to to replace…I ended up going to ETHDenver, and just, you know, access level to all the founders of these crazy projects. And it just really kind of showing this could be a future peer to peer in a financial industry that might be on a bad trajectory. 

And actually, the perfect excitement about us coming onto Bittrex is Bittrex is where I traded my first tokens, one of my first forays into trying to turn Ethereum into OmiseGO and Power Ledger, and these other things back then was through Bittrex, so it’s really, really cool to be able to be talking to you guys about our project today.

Stephen: And Ethan, how did you get into crypto?

Ethan: I actually came in, I heard about Bitcoin through a couple of hedge fund relationships I had. And I thought it was really interesting that there was a type of encryption that could function as a store of value. So I started reading white papers and I came about it that way. 

And I’ve been much more interested in the actual use case of blockchain technology, finding practical use cases for it. I’m very interested in working on my own projects. So I’m not necessarily a Bitcoin holder now. Doesn’t mean I won’t be in the future. I think it has a great future ahead of it. 

But I’m very interested in, actually, the technological use cases of the technology. And once I read the Bitcoin white paper, and also the Ethereum and also IPFS, I was pretty much hooked.

[04:28] Offsetting Emissions

Stephen: Awesome. Well, I think it’s also ironic, Matthew, you’re back on Bittrex. So we’re glad you’re here. So let’s talk a bit more about how…let’s look at the positives. How are these offsetting carbon emissions important for both people and businesses?

Matthew: Yeah, it’s a great question. In your intro, you mentioned some of the ways that it’s really showing itself on the planet and in different weather patterns and temperatures and other things. But what’s also changing is our ability to track it. We’re getting so much more, perfect, if you want, kind of numbers around exactly what kind of activities are producing what and that data is a huge driver into the future.

It’s hard to solve a problem if you can’t kind of quantify what it is that you’re trying to solve. So all the different kinds of technologies around that are helping fuel what’s next, which is all the solutions. And although our token is around carbon offsetting, I think the real answer is kind of a diverse approach, you know, transition to more clean energy where we can…electric vehicles even the kids know, the reduce, reuse, recycle, all those things play a big part. 

And carbon offsetting is really unique, because if you make a commitment as a household or as a corporation that we want to become carbon neutral, there’s always going to be things that you can’t turn to doing fully without a fossil fuel impact of some kind, you know. There’s some kind of shipping, there’s some kind of a transport, and that’s where offsets really give you another whole option by supporting these other climate change projects that are having a net positive effect and helping them kind of monetize the growth of them. 

You can even go back and make those aspects that might have a greenhouse gas footprint or fossil footprint, carbon neutral, as well. So it’s important for businesses and people.

Stephen: So I don’t think everybody listening knows what a carbon offset is. So Ethan, do you want to describe what is that? How does that work? What do I get from buying a carbon offset?

Ethan: Well, yeah. Matt was the one that brought this concept to me. And I would actually feel remiss in actually explaining this. Matt, I don’t want to throw it over to you, but as you brought me into this project, I think it’s only right if you answer that.

Matthew: Yeah, and I turn over my shoulder and say who told me about that? A great part of our history was meeting pioneers in the space of offsetting. And to explain an A to Z of what that would be…take, as an example, an activity that has a scientific means of reducing, you mentioned carbon and methane and the other types of things. 

Take, for example, a landfill facility that’s gas just constantly letting GHGs and other things emit into the atmosphere. A project that we partner with comes in, essentially has gigantic vacuums constantly sucking these harmful things from entering into the ozone layer. And through underground tunnels back to a large engine converts it into renewable energy. But in the middle, whatever’s happening with the chemistry between the carbon and the oxygen and that processing, actually destroying these things. 

So other than just producing energy, they’re actually creating another acid in the middle, if you want to call it that, where I can say, I’ve actually extracted x from the atmosphere. We know that methane is x times more harmful than carbon. So there’s a lot of international certifying and verifying that goes into saying your math…okay, well, then you’ve produced x amount of tons. 

And the factory or manufacturer across the street, whether it’s because of marketing and interest that they want to become more green as part of their story, or they actually have some kind of an obligation where they’re saying we have to become more green but we can’t do it within our own processes, could then purchase these assets from the other person’s making a net positive. 

So it’s not just there are projects out there that aren’t just carbon neutral, but the impact of what they’re doing is positive. And to encourage their growth and expansion to monetize that from other folks who are looking to say, you’ve got this offset you created, I’m going to buy that from you. And now it’s my impact. It’s kind of a circle there of offsetting. 

There’s so many different kinds of offsets and things, but with our project specifically, we really look to tie to exactly what we describe, like a more scientific basis of exactly this happened, it wasn’t based on an aspiration of funding something that we want to do that’s good. It’s really just being able to tag and track these positive elements that people are looking to trade, whether it’s on a massive scale or peer to peer small scale.

Stephen: So it’s not just big companies that can buy these credits to offset their polluting activities. I think a lot of individuals don’t realize they have a big carbon footprint. Your team does a great example on your website showing how much carbon is emitted from a single cup of coffee. 

So can you dive into what the average carbon footprint of a person is, which might be even more depressing for each of us, but then we can feel guilty and we can buy your tokens and assuage our guilt, I guess.

Matthew: Well, as you’ll also find on our website, we’re not about guilt at all. We’re about positivity, because if you can put a label on it and put some tracking on it, that’s the first step to solving it. That’s what economics is all about. 

But there’s a huge range, obviously. Some of the factors kicking into what your or my or anybody we pick in the Earth’s kind of footprint is where they live. If you live in Australia or you have a grid that’s hugely fed by coal, that means your individual footprint is going to be that much higher, because everything you do is going to be pulling off of dirtier sources of power, and also transportation. If you’re in an area that’s not very dense and you’re constantly hopping in a truck or getting on airplanes, those are the kind of things that have more of an exponential shift. 

But a very big ballpark, depending on what studies you want to see, the average American would say, 15 to 20 tons of carbon might be their footprint for the year. Somebody in China might be three. A global average sometimes would be around four, but, certain different kinds of developing nations and other places have often smaller footprints, just by different lifestyles, different access to the kind of activities that cause that bigger footprint. 

But you know, it’s not really doom and gloom, and tons can sound like a lot. But there really are solutions out there, not just to helping yourself try to reduce down to zero. But it can really help your outlook on the future contributing to something and make it more of a positive light of that kind of aspect of investment to the planet rather than just how horrible are we.

[11:04] CUTting Into Carbon

Stephen: Okay, so we’ve talked about the use cases for both individuals, and I guess, companies, but why don’t you tell us a bit more about the story just behind CUT itself? How did this project get started? How does this work? How does this token translate to a carbon offset?

Matthew: It kind of comes from a really interesting team that crosses over. You know, Ethan mentioned a bit that he has a background in hedge funds and experience on our team in finance capital markets. 

Crossing over with one of our other founders who’s an expert in the carbon offsetting side of things, just really seeing, it didn’t take immense amounts of creativity to see the ways that the blockchain ledger could help replace the registry for these kind of things, or get rid of problems where you don’t want to necessarily go get 10,000 tons. That doesn’t make sense for your small amount you want to offset. 

But it really got started…I was just trying to get the idea of how can we take this thing that people really want, and don’t necessarily have inroads to get to, but unlock it on a consumer basis? And what does that do for demand for offsets and things if you can help, kind of invigorates, who has access and how easy it is for them to go on and get it? 

So from that vision, how it works is those of us on the founding team who’ve been working closely in blockchain have created a ledger and a smart contract that’s able to track, obviously, the offsets, where the offsets come from, are not, if you buy this token, we’re going to go to market or go try to support this initiative. 

It’s that our founding is also based on having and buying a massive pool of these carbon offsets that are actually sitting here behind the token. So it’s not about…again, I keep saying it’s not about aspirations. But that’s kind of what our project was absolutely trying to do. It’s just about impact. And it’s not about trying to play a long game about it. 

Stephen: Sorry to cut you off, One of the different ways…I think it’s very interesting. So one of the different ways…again, I don’t think a lot of listeners know that much about this carbon market. 

They tried to launch this maybe 10 years ago and it never took off. I think this has probably the best chance ever, and also with a huge focus on the environment as well, which has also changed from 20 years ago. 

But what are the different ways people or businesses can offset carbon emissions, just generically, without this token? And then how is your method sort of innovating the whole process using blockchain?

Ethan: So the issue there, though, and we don’t want to point any fingers. But not all carbon offsets are created equally. There have been, in certain instances with REDD and REDD+ credits, there have been instances of fraud. And there’s also been cases where indigenous people have lost their land from illegal logging contracts and things like that. 

So we really focus on working with the best of breed of carbon offsets that we can through our partnerships, and using blockchain technology to provide the transparency from those projects directly to the end user that’s using the CUT token, as carbon offset retirement as a service. That’s our utility. So when you look at that…can you go out if you are a corporation and plant trees? That’s great. We’re not saying that’s bad, but it’s also very difficult to judge the actual amount of carbon that’s being offset just by planting trees, even though that sounds great. And again, we’re not saying not to do that. It’s just very difficult to actually say, okay, we’re offsetting this carbon footprint by planting trees. 

And the other thing that we do not focus on is that the carbon offsets that we’re capturing are already carbon offsets that have been delivered, so there’s no future credit given against any type of pollution out there. That’s another big thing for us. You know, this is not a way to offset emissions in the future. This is really because carbon gas capture projects have already generated the emission. 

So that is not going too into the weeds, there’s a lot of different things in the voluntary carbon offset market that we make that process a lot easier. So buying CUT token simplifies a lot of things.

Matthew: Yeah, he hit the nail on the head with…we mentioned it being, it takes a whole bunch of different approaches to reach that impact. Forestry and tree planting, strong, proven, positive. 

Conservation, saving wetlands and other things of that nature are very positive. But then trying to monetize something on top of that ends up having a negative benefit, because you’ve gone and sold off the future benefit of the next 100 years of these trees, and they burned down. 

Or you’ve gone and sold off the future benefit of capturing this carbon in some kind of a mangrove or a wetland. And then the next leader or government decides to put a resort, it’s just, it’s really difficult if you want to get into the actual offsetting, and the two sides of this, you can’t…protect the tree, yes, do that. But then you don’t need to go and sell against somebody else’s fossil fuel footprint for that. 

To be successful with this project, we know we had to be specific. And it is an emerging space with so many different kinds of solutions coming out, which is amazing. For ours, we just had to kind of take a really narrow focus that it’s tangible, scientifically tracked, and it’s not based on any of those kinds of future elements that could change. 

Otherwise, how could you be on the other side of an offset project that’s monetizing it, if it hasn’t been captured or completed. That’s kind of where we draw our line of differentiating from a lot of the solutions that have been out there.

Stephen: It’s really fantastically interesting what you guys are doing. In order to do it, you’ve built quite a strong team over at CUT. So maybe you can tell us a bit about the team who is behind this project and how it came into being.

Matthew: Compared to a lot of different projects out there, our team is really small, but mighty. We have specialists at the highest level in certain areas, but not massive teams of them. I mentioned our founder, David McLennan, who runs the landfill job. He took part in some of the first ever carbon offset certifying and trading, just post Kyoto in 97. 

So you want to get a speech about what kind of…where’s the impact and how do these different things line up. We just had a constant kind of feedback loop in that way. And even on the ground in Liechtenstein, the craziness of the last year with being able to travel and do things the way we wanted in person, just to be able to have all the resources and team we’ve been able to build out on the ground, even in the region, like marketing in Austria, fantastic, and different relationships in banking and other things. 

And in Switzerland and Netherlands, we’ve really kind of taken a new second home there, as well as having another strong base here in Halifax as well, kind of helping with technology development, people who have built the internal guts of software and hardware and emerging technologies. 

We’ve spent a lot of time the last few years developing on green networks and trying to be more efficient, and what hardware can use the least energy and all these things really, kind of the team behind it has been unknowingly preparing for CUT in a lot of different ways. Even from our advisors who have…certifying offsets, helping write new protocols and specialists in building efficiency, we just really support ourselves with the voices that keep us clear and on track, which we mentioned. It’s positive, but it’s also to have a real serious impact and project that’s on point.

[18:53] The CUT Vision

Stephen: And for the team, what’s the ultimate objectives for the next 12 months? How are you going to grow using the token?

Ethan: So while our immediate objective in the next 12 months is basically just to get the word out about our project, and to you know…Stephen, you mentioned earlier that we’re making carbon offset retirement approachable for individuals. 

But what’s really interesting about utilizing our blockchain technology and connecting the transparency and carbon offset retirement as a service, all the way from the landfill gas capture to the end user, which is what that end user is using our token for to offset a various activity, service, product. We can, also at scale, offset the carbon footprint of major corporations. 

And there’s been a lot of discussion about some very well known companies that are very large that have acquired Bitcoin. They’ve gotten a lot of flack because of the carbon footprint of Bitcoin. Large corporations, large institutional investors, provided they’re able to get on Bittrex Global, of course, can utilize the CUT token to offset the carbon footprint of their Bitcoin holdings. 

And that’s something else that we’re really excited about, because we can go from the very small to the very large. And we can also help many companies and institutional investors also become more ESG focused. And there’s a variety…there are literally hundreds of billions of dollars looking to invest in companies that have a ESG focus… 

Stephen: Ethan, do you want to just tell everybody what is ESG? 

Ethan: So it stands for Environment, Society, and Governance. And ESG scores, basically, will take into account what is your carbon footprint as a corporation? What is your business model? Are you a diversified company when it comes to leadership? Do you have minorities, etc, that are involved in your business? 

And there are major efforts all over the world to invest in companies that have a strong ESG focus. And these are all things that CUT token can help with. That’s really something that we want to get out to the entire world over the next 12 months.

Matthew: The exciting thing is we talked about these potential integrations and potential partners, that all feeds the underlying goal, which is to create more demand for more offsets for more projects to have to create more impact. And we can bring it into this system that helps them be able to monetize that, and to see what people are going to do with it. 

We have plans, and we see it could be used for this use case, it can be used for that, but also being open source like it is and ERC-20. The way different technology builders and other peoples could look to integrate this into what they’re doing. I think the next 12 months, our goal is to try and create more impact through the token, but short term, especially interesting just to continue to bring as much education and data with us as we can into the space, but seeing what people are going to use it for. 

We’ll see some interesting things that maybe we didn’t even think of, but now that we’ve opened up this access to people without having to go through XYZ of paperwork to buy these unattainably large amounts of something, but what are people gonna do with it? It’s kind of another interest objective for the next year, for sure.

Stephen: And then what’s the ultimate sort of longer term vision of CUT? Where do you see the intersection of carbon capture and blockchain technology going in five or ten years? Which I understand in crypto, that’s like 100 years. But what’s your best guesstimate? 

Matthew: Well, I think we’ve isolated…there’s a void to be filled within crypto not just for things that aren’t so harmful to the environment, but also for something that people are saying, what’s the utility of this? Or what’s the value of this thing? 

For the next five to ten years as a longer term out, you know, we want to use what we’ve built to slap on top of as many use cases as we can to feed as many kinds of solutions as we can. We love blockchain, it has so much potential, but at current, so many different things that you want to scale up behind it building into whatever it is…ETH 2.0 or kind of the future space, it often is pointing back to the harmful side of the environment. 

So how can we fit in there to kind of fill a big need and have people not have to think twice but really leaning into the commitment to emerging technology to building around this? And okay, we finally have an answer when people are hammering us about, what about the footprint of these innovations? How does that look down the road? We want to help people answer those questions in a more concrete manner. 

And maybe that enables other innovation because while we have a solution of how we can be offsetting a footprint that we’re not happy with right now, as we move to reduce it and find new hacks of how we can be more efficient. We also have a short term solution to build on top of while we figure it out. That’d be a really perfect place for us to live in the market right now.

[24:13] Stronger in Numbers

Stephen: Great. And you’ve recently and thank you again, you’ve recently listed on Bittrex Global. So can you walk us through how the process has been and you know why you chose Bittrex Global?

Ethan: So I was just going to say in regards to the process, we’re really excited about working with BIttrex Global because, A: of where you guys are domiciled and B: the fact that you guys not only have been easy to work with but you’re also really focusing on compliance. And we want to grow together. 

We think that there are a lot of other exchanges out there that…some exchanges have shunned compliance. We don’t think that’s the right way to grow at scale and to get larger institutional investors in the space and to see crypto grow as a whole. So we’re very excited to be working with you guys there. 

And also, setting up in a place like Liechtenstein for us, we think was really important, just to show the world that our project has taken the necessary steps to set up in a jurisdiction where we have compliance, we have a framework to list. Everybody talks about regulation in the space. And too much regulation is a bad thing, the right regulation is a good thing. And that will allow the space, the blockchain, the cryptocurrency space to grow at the right pace with the right people. And we think that what you guys are doing at Bittrex Global is great, and we’re really happy to be a part of it.

Matthew: Definitely. You know, with anything new, there’s the kind of A and B of it that’s very exciting and novel, but it also means that there’s certain parts of certain trails that haven’t exactly been nailed down. So it’s been really interesting and different, like a blockchain act passing parliament

And it’s not like it’s been there for five years, and they’ve seen hundreds of different cases. It’s all really, really new, in the banking, and Ethan mentioned the regulation. We’ve never been short on ideas and use cases and how we can create impact. 

But there’s always…the next conversation is immediately around regulation and what you can do and not. So to be able to find a jurisdiction that even if it is not just go set up a company in 24 hours and get running, you wouldn’t want that. You’d want to know that who’s there has the trust and having that as a foundation, we can focus on building and growing instead of always being focusing on can we do that and not. 

And that’s why it was worth every second and every penny to get up in a jurisdiction like that. Also, who is so focused in the area on renewables as well, like decades more of history in wind energy and taking pride in being green in different ways, in transport and society, all those things matched up along with the flag Bittrex Global planted there for us to want to follow suit, definitely. We’re thrilled is the word for sure. For us being stood up there now.

Stephen: Great. Well, I thank you guys so much for coming onto the podcast. Just one thing to point out, I think you guys left out. So in addition to being good, and it’s great to be green, you can also be greedy. And these tokens should go up in value. I mean, carbon credits have a value and it’s supply and demand. 

So in addition to the underlying technology trading up in price, the tokens themselves can go up in value as well. So I think that’s the other reason to invest. You can align your greed with your greenness, shall we say?

Matthew: Yeah, there’s lots of things we can speculate on. The future value of making something carbon neutral. Although there’s going to be a million more attempts and tries and different carbon taxes, this is a space that it’s clear to see there’s massive ventures globally, users, consumer, corporate, everybody’s looking for solutions here. 

So CUT is really a way to ensure your participation in that, whether it’s today or down the road that you choose to want to activate the utility to retire a CUT, or just simply that you also think the future of sustainable solutions and making carbon neutrality and offsetting is something that’s going to grow into the future. It’s all tied up in the ecosystem of what’s behind this token.

Stephen: Right. So you guys are taking a cut at solving the problem, pun intended. So Ethan and Matthew, thank you so much for coming on the podcast and talking with us about the Carbon Utility Token. Looking forward to hearing more great news from your project. And thank you so much. 

Matthew: Our pleasure, for sure. Thanks so much, Stephen.

Ethan: Cheers, guys. Thanks.

Thanks for listening to The Bit, the Bittrex Global podcast. Our guests today were Ethan Gilmore and Matthew Pickup from the CUT token team. To learn more about CUT, visit www.cut.eco and check out their token CUT on Bittrex Global. To learn more about Bittrex Global, visit global.bittrex.com. And please make sure to subscribe to our podcast. Thank you for listening and for making The Bit one of the fastest growing podcasts in the world of crypto. I’m Stephen Stonberg, the COO and CFO of Bittrex Global.