From Silicon Valley’s elite investors to emerging digital artists and innovative gaming developers, blockchain and cryptocurrency forced everyone to jump on the virtual train with incredible possibilities. However, cryptocurrencies’ shocking environmental impact is a prominent concern that certainly can’t go unnoticed.
2022’s climate crisis demands a change and that includes the improvement of the energy profile crypto. Luckily, there is an array of green blockchain initiatives that, if implemented correctly, can lead the way for a sustainable cryptocurrency future. Amongst the top priorities is to focus our attention on blockchain energy usage and take advantage of the benefits of renewable energy for a greener virtual future.
Additionally, we need to create energy-efficient protocols and ways to offset carbon emissions derived from mining and transactions.
Why crypto is bad for the environment
It is estimated that each Bitcoin transaction uses around 2100 kilowatt-hours (kWh), which is roughly what an average US household consumes in 75 days.
A study conducted by the science journal Joule revealed that, at the lowest bounds, Bitcoin’s power consumption emitted about 22 million metric tons of carbon dioxide the previous year. To put this into perspective, that’s almost 10 percent of the global railway sector’s annual emissions—this refers to one single currency alone.
The Green blockchain initiatives of the Crypto Climate Accord
CCA (Crypto Climate Accord ) is a private sector-led initiative for the entire crypto community focused on decarbonizing the cryptocurrency and blockchain industry in record time. As Peter Wall, CEO of Argo Blockchain, the world-leading cryptocurrency miner and data center business, mentioned “The Crypto Climate Accord helps lay the groundwork for that action and we are both eager and determined to ensure that supporters and signatories remain committed to the CCA’s goals.”
Strikingly, It is estimated that each Bitcoin transaction uses around 2100 kilowatt-hours. That’s equivalent to the energy consumed by an average US household during the span of 75 days. Argo Blockchain and 250+ supporters and participants of CCA made a public commitment to achieve net-zero emissions from electricity consumption associated with all of their respective crypto-related operations by 2030.
Square’s Bitcoin Clean Energy Investment aims to make crypto more sustainable
Another prominent name in the Green blockchain initiatives is Square. Square’s Bitcoin Clean Energy Investment Initiative aims to offer support to companies that decide to adopt renewable-energy protocols within their crypto ecosystem. Thus far, Square committed $10 million to this initiative and has recently released “Bitcoin is the Key to an Abundant, Clean Energy Future” a memo that explains how the Bitcoin network functions as a unique energy buyer that enables society to deploy substantially more solar and wind generation capacity.
Ethereum 2.0 aims to minimize crypto’s carbon footprint
It’s no secret that even though revolutionary, Ethereum, the second-largest cryptocurrency by market capitalization has an outrageously high carbon footprint. To put this into perspective, one transaction on the Ethereum blockchain needs the same energy as a conventional household for a day and a half. Ethereum 2.0 is here to change that!
At the moment, Ethereum Ethereum follows a “proof-of-work” mining system similar to Bitcoin’s but will soon transition to a proof-of-stake system to minimize Ethereum’s energy impact. As they mentioned in 2021 in an article, the proof-of-stake upgrade will slash the Ethereum blockchain’s energy use by 99.95 percent.
There are many more tokens in the DeFi (decentralized finance) sphere that have already adopted proof-of-stake such as Cardano, EOS and TRON, and Algorand which also claims that it will soon be the first climate negative cryptocurrency.
In 2021, two of the most prominent cryptocurrency exchanges, FTX and BitMex made their plans to become carbon neutral known to the public. The way to achieve that is by purchasing carbon credits. Sam Bankman-Fried, the CEO of FTX. explained that “FTX is going carbon neutral, donating $1m to offset the blockchain resources it uses,” which aims to make the digital currency eco-system a greener place for everyone.
Green pools for greener crypto mining
Green pools are essentially independent groups of crypto miners who come together to combine computational power to reap some block rewards. DMG Blockchain Solutions and Argo Blockchain created Terrapool, the first-ever Bitcoin mining pool powered by clean energy. At the beginning stages, Terrapool will use hashrate from DMG and Argo (energy generated by hydroelectric resources).
Luckily, the demand for greener virtual currencies was met with positive responses. The Green blockchain initiatives above are certainly a step in the right direction.