Forest NFT Case Study

This fictional forest is intended to show a real situation faced by forest owners and the economics involved for each party.

Nathan is a third-generation forest owner. His grandfather purchased the 250-acre forest and his family has been the proud stewards of it for the past 60 years. They last harvested timber on the land 30 years ago. They previously select-cut their timber, meaning not all of the trees were harvested 30 years ago, and some trees on the property are estimated to be as old as 120 years. Nathan is proud that his forest has excellent biodiversity and is home to deer, many species of birds, and other wild animals.

Nathan is also looking for the forest to provide for his family in a financial capacity. He has reached out to local foresters and has been offered $200,000 cash for all of the timber on his property. The forester would be responsible for all costs including replanting of a single species of pine tree for optimal long-term timber harvesting. Nathan would likely be able to do a small thinning harvest in 15 years, another thinning harvest in 22 years, and a full cut in 30 years. Overall, the biodiversity of the forest and its inhabitants would suffer greatly.

CarbonHive could offer an excellent alternative for Nathan's family that keeps the trees in place and promotes biodiversity. A qualified project developer has assessed the forester's data and determined that by keeping the trees in place, he would sequester an additional 5.6 tonnes of CO2e per acre per year. This would translate to almost $40 per acre per year in revenue, paid up-front for 3 years. Nathan agrees, the project developer completes the assessment within 30 days, and CarbonHive cuts a cheque to Nathan for $27,937 within another 90 days.

Using the data prepared by the project developer, CarbonHive launches an NFT. Buyers purchase their fractional share of Nathan's project and earn Virtualcarbon equivalent to their pro-rata share of the carbon sequestered by the forest. The project developer continues to publish satellite monitoring during the life of the carbon project, ensuring that Nathan's family continues to honor its pledge to maintain the forest.

Economics to the Forest Owner

Participant	$
NFT Buyers Pay	$52.50 * 750 units = $39,375
Virtualcarbon Treasury Contribution	($2,363)
CarbonHive Platform Fee	($1,575)
CarbonHive Fixed Fee	($2,500)
Project Developer Fixed Fee	($5,000)
Net paid to Forest Owner	$27,937

Forest Owner Conclusion: The forest owner earns 71% of the gross revenue from this project. That figure will improve with larger forest areas covered and denser forest carbon, up to 90%.

Economics to the Forest NFT Buyer

Participant	Virtualcarbon
Carbon Sequestered (kilograms)	5,600 kg / acre / yr * 250 acres * 3 year pledge = 4,200,000 kg
Sampling Buffer (15%)	(630,000) kg
Total Credits Issued	3,570,000 Virtualcarbon
Permanence Buffer (10%)	(357,000) Virtualcarbon
Total Distributable Credits	3,213,000 Virtualcarbon
Land NFT Owner Distribution (10%)	321,300 Virtualcarbon
Project Developer Distribution (5%)	160,650 Virtualcarbon
NFT Owner Distribution (85%)	2,731,050 Virtualcarbon
Monthly Virtualcarbon / Forest NFT	101.15 Virtualcarbon

Forest NFT Buyer Conclusion: The Forest NFT buyer would earn over 100 Virtualcarbon per month over the 36 month project period. With a Virtualcarbon trading price of just $0.03, the Forest NFT owner would have earned rewards equivalent to $109.24 and will still hold their NFT. Put another way, owning just 4 Forest NFTs would completely offset the carbon emissions of 1 internal combustion engine vehicle for the 3 year project period.

Economics to the Land NFT Buyer

Participant	Virtualcarbon
Land NFT Owner Distribution (from above)	321,300 Virtualcarbon
Total # of Land NFTs Minted	75,000 Virtualcarbon
Virtualcarbon Distribution / NFT	4.284 Virtualcarbon
Monthly Virtualcarbon Distribution	0.12 Virtualcarbon

Land NFT Buyer Conclusion: The Land NFT buyer would earn a meager 0.12 Virtualcarbon per month per project. But over time as the # of CarbonHive forest projects grows and the price of Virtualcarbon rises, the value of the monthly reward will grow. See our Roadmap to see our ambition to protect 250,000 acres of mature, biodiverse forest land within the first 5 years.