One of the biggest concerns associated with the crypto space is Bitcoin’s carbon footprint. Bitcoin consumes more electricity, 150-terawatt hours annually, than Argentina, which has over 45 residents. Another report by Sciencedirect shows that the Carbon intensity of power consumed by the BTC network increased from 478.27 gCO2/kWh in 2020 to 557.76 gCO2/kWh in August 2021. Ethereum also consumes insane amounts of energy. The most troubling question is, can crypto go green?
Can Crypto Go Green?
Carbon neutrality is reasonably achievable in the crypto ecosystem. Some mining and other crypto businesses claim to have gone fully green in recent years.
Earlier in 2022, a Costa Rican hydropower plant hit the media for offering carbon-neutral crypto mining services. The plant feeds about 650 computers, mining crypto for 150 customers,s and uses clean energy. This hydropower plant began mining crypto amid the COVID pandemic.
Miners all over the world, but especially those located in US regions, are slowly switching to green energy amid pressure from governments. Bitfirm claims that at least 99% of the power they use in mining Bitcoin is green. Their website indicates that they use 158 megawatts of clean energy. Neptune, a digital-asset-focused network, also markets itself as green.
Many stakeholders within the crypto ecosystem are working hard to ensure blockchain networks are carbon neutral. The Crypto Climate Accord will ensure all blockchains use renewable energy by 2030.
Yes, the crypto world can achieve carbon neutrality. Miners and blockchains can work hard to transform their services green.
How Can Crypto Become More Green?
Yes, crypto projects can become green. Continuous efforts made by many companies, especially mining, focus on reducing crypto’s carbon footprint in the next few years. How can the general crypto ecosystem become fully green? Here are a few things crypto projects can do;
Changing the Consensus Algorithms Used
Blockchain networks leverage consensus algorithms to release coins and keep the network secure. The most prevalent consensus mechanism for older blockchains is proof of work (PoW).
PoW is a highly energy-intensive system where miners work very complex computations to release new coins. Cryptographic computations consume a lot of resources, including computers and electricity. Most cryptos using this consensus mechanism have a very high carbon footprint. Good examples are Bitcoin, and Ethereum, mentioned earlier.
Machines like ASICs created to optimize energy consumption and mining processes still use massive amounts of power. Hence, mining has a very high carbon footprint.
However, newer cryptocurrencies are switching to more evolved and energy-efficient consensus mechanisms. Proof of Stake (PoS) is the most popular consensus system today. PoS uses way less power since block creation, and rewarding depends on the amount of stake held by network participants.
PoS has been evolving into better versions like Delegated PoS, Nominated PoS, Mutualized PoS, and others. Networks like Cardano, Polygon, Polkadot, EoS, and Tezos use some variation of PoS consensus. The Ethereum merger too introduces PoS. Using PoS can help reduce ETH’s energy usage by about 99%.
Use Alternative Energy Sources
The second way the crypto ecosystem can become green is by leveraging alternative sources of energy. Of course, the best, most clean energy sources include solar, wind, and hydropower.
The Costa Rican plant mentioned earlier is one of the examples of hydroelectric plants powering crypto mining. Genesis mining, an Iceland-based mining rig offering cloud mining services, uses renewable energy. The use of alternative sources of energy in mining will reduce crypto’s carbon footprint.
Why Should Crypto Companies Go Green?
Global Regulation Changes
Another driver of crypto’s carbon neutrality could be regulatory challenges and changes. Governments can enforce regulations encouraging crypto businesses to reduce their carbon footprint.
To protect their country’s environment, China banned Bitcoin and mining. However, banning is not a good solution since it deters creativity and innovation.
Instead, governments can ensure crypto-focused companies are transparent about their carbon footprint. Requesting transparency will force crypto companies to reduce their footprint.
Secondly, governments can introduce taxing systems for those with extreme carbon footprints. By setting such regulations, crypto-focused companies will go green to avoid taxes, exposure, and losing customers. It could encourage them to take up green energy sources.
Pressure From Consumers
Consumer pressure can also force crypto companies to reduce their carbon footprint. Crypto enthusiasts and the community can increase calls for crypto to go greener. If customers show interest in environmental sustainability, crypto companies may have to offer more eco-friendly services.
NFTs and the Environment
As you explore the idea of eco-friendly crypto space, it’s vital to understand the impact of NFTs on the environment. Non-fungible tokens are blockchain assets offering proof of ownership of different digital assets, including virtual artwork and property.
The minting and transfer of these digital assets consume massive amounts of energy. According to research, the carbon footprint of selling a single piece of NFT on the Ethereum blockchain is equal to a 1-hour flight.
However, once Ethereum completes the beacon chain merger, NFT’s carbon footprints will reduce vastly.
Eco-Friendly Cryptocurrencies You Can Invest In
After understanding crypto carbon neutrality, you need to know the most eco-friendly crypto investments. Among them include;
ADA, the native coin of the Cardano network, is among the greenest cryptos available today. Cardano uses PoS consensus, which is highly energy efficient. The blockchain completes 1k transactions per second, using energy quite well by reducing electricity costs. Research shows that the Cardano network consumes 6GWh of power, hence energy efficiency.
ADA is one of the top ten crypto coins by market cap. The current ADA value is $0.49, but experts predict the coin could grow to as high as $13 by 2030. It’s an eco-friendly investment coin.
Another eco-friendly crypto coin to invest in is XRP. As one of the top-performing coins, XRP still maintains an excellent ecological stand with an average transaction power usage of 0.0079kWh. Some Infographics indicate that XRP uses the least power compared to Bitcoin, Ether, and Visa. By completing 1500 transactions every second, XRP vastly reduces its carbon footprint.
The investment worthiness of this coin XRP is also worth a look into. XRP, valued at $0.36 when writing this report, has high investment prospects, according to experts. Some predict that the coin could hit $10 by 2030.
MIOTA, the native cryptocurrency of IOTA, is another one of the most eco-friendly crypto coins. The IOTA network leverages a blockchain system called Tangle, optimized for environmental sustainability. The Tangle network leverages a probabilistic consensus that combines some bits of PoW, consuming just about 0.00011 kilowatt-hours per transaction.
As an investment option, MIOTA, which traded at $0.3 when writing this report, will hit $8 by 2030.
XLM, the native coin of the Stellar network, is another eco-friendly crypto you can choose to invest in. This network helps in international transfers and banking for the unbanked. Research by the Poseidon Foundation indicates that stellar consumes 0.00001kWh per transaction. Its unique consensus mechanism involving federated voting makes it an energy-efficient platform.
When writing this report, XLM was trading at $0.1, but analysts predict that the coin could hit $3 by 2030.
This guide explores the whole idea of eco-friendly crypto networks. Crypto projects can achieve carbon neutrality using alternative energy sources and better consensus mechanisms. You can invest in many eco-friendly cryptos available today, including Cardano, Ripple, MIOTA, Stellar, and DOT.
Are NFTs Eco-Friendly?
Non-fungible tokens, or NFTs, are generated using a lot of energy and are mostly used on the Ethereum blockchain system.
According to studies, selling one art piece on Ethereum has the same carbon footprint as taking an hour-long flight.
Can crypto be made eco friendly?
Yes, cryptocurrencies can transform their working mechanisms/technology to become more eco-friendly. In 2022 for instance, Ethereum, the second-most widely used cryptocurrency, will upgrade to a 2.0 version that will significantly lower its power usage and adverse environmental effects.
According to TRG Data Centers, chia is a fantastic illustration of a sustainable cryptocurrency token that has been built to be less energy-intensive. Instead of mining, or proof-of-work the “farming” method used by chia is hard drives, or proof of space.
Which crypto uses green energy?
SolarCoin (SLR) Global, decentralized, and unconstrained by any authority is one of the greenest cryptos. Like other cryptocurrencies, SolarCoin can be spent and traded, but the platform’s main distinction is that it attempts to encourage verifiably produced solar energy, a real-world environmental activity.
Other green coins include BitGreen(BITG), Cardano (ADA), Stellar (XLM) and Nano (NANO). These cryptocurrencies feature low carbon footprints hence are considered eco-friendly.
How does Crypto Affect the Environment?
The electricity needed for the mining process, which is how new digital currency are created, is the environmental impact of cryptocurrencies that is most evident. Many types of cryptocurrency rely on mining, however most people only think about Bitcoin mining.
The energy required for mining, especially Bitcoin mining, is enormous, and the competition among would-be cryptocurrency billionaires to create the most powerful mining rig generates far more electronic garbage than hefty bank accounts.