Eco-Friendly and Green Cryptocurrency: Can Crypto Go Green?
As cryptocurrencies become more and more accepted around the world, people start wondering: are there any ‘green’ cryptocurrencies? Cryptocurrencies that rely on Proof-of-Work technology, notably Bitcoin and Ethereum, have been criticized for the amount of electricity consumed by mining, and this is seen as the most important issue that cryptocurrencies are riddled with. Read more about green cryptocurrency in the new StealthEX article.
The Bitcoin Problem
If you think about it, the impact on the environment produced by mining is huge. As of 2022, the Cambridge Centre for Alternative Finance (CCAF) estimates that Bitcoin consumes 131 TWh annually, representing 0.29% of the world’s energy production and 0.59% of the world’s electricity production, ranking Bitcoin mining between Ukraine and Egypt in terms of electricity consumption.
Until 2021, according to the CCAF, much of the mining for Bitcoin was done in China. Cryptominers relied on cheap coal power in Xinjiang from October to May and then migrated to regions with overcapacities in low-cost hydropower, like Sichuan, between May and October. In June 2021 China finally banned Bitcoin mining and the miners moved to other countries. In December 2021 the world picture changed: today, more mining is being done in the U.S. (35.4%), Kazakhstan (18.1%), and Russia (11%) instead.
What can we do to reduce the impact of cryptocurrency mining on the environment? Well, first of all, we need to start using alternative energy sources, i.e. solar, wind, geothermal and hydropower. And the good news is, we’re slowly getting there. According to the Bitcoin Mining Council, based on a survey of 32% of the global network, 56% of BTC mining was done with the help of renewable energy resources.
Carbon Emissions and Electronic Waste
Concerns about Bitcoin’s environmental impact relate the network’s energy consumption to carbon emissions. The difficulty of translating the energy consumption into carbon emissions lies in the decentralized nature of Bitcoin impeding the ability of researchers to identify miners geographically and so examine the electricity mix used. The results of studies into the carbon footprint vary.
Some claim that BTC alone could produce enough CO2 emissions to push warming above 2C within less than three decades, while others believe this scenario is flawed. According to their calculations, Bitcoin’s annual energy consumption results in annual carbon emission which is comparable to the level of emissions of countries such as Jordan and Sri Lanka or Kansas City. So… Not that big of a deal, after all, is it?
Another big problem is electronic waste. Researchers estimate that due to the consistent increase of the Bitcoin network’s hashrate, mining devices have an average lifespan of 1.29 years until they become unprofitable and need to be replaced. Mining devices based on ASIC technology, the standard hardware for mining, are specialized and cannot be repurposed for another use, and hence become electronic waste once they become unprofitable, which leads to more garbage polluting the planet.
The excessive amount of energy consumed during mining has led to greater interest in cryptocurrencies that use Proof-of-Stake protocols. PoS are a class of consensus mechanisms for blockchains that work by selecting validators in proportion to their quantity of holdings in the associated cryptocurrency. This is done to avoid the computational cost of Proof-of-Work schemes. However, PoS protocols can’t serve as a perfect replacement for the PoW consensus. To fit Bitcoin’s security model, the new algorithm must have the following features:
- Expensiveness: Mining a block must create an embedded cost that is roughly equivalent to the reward for mining the block.
- Irreversibility: These costs should happen the real world, through processes that cannot be reversible in the short term without extra expense.
- Self-certification: Verification has to be done with the help of the computer software only, without being tied to anything else.
PoW possesses all three features, while PoS offers just one and completely ignores the other two (irreversibility and self-certification). We can speculate that under pressure from eco-activists and regulators, Proof-of-Work protocols will be universally replaced by less energy-intensive alternatives and if the crypto space continues to cling to energy-consuming algorithms, these will be banned in the wake of a new energy crisis. To make matters worse, it is currently physically impossible to process cheap and fast transactions using PoW, which faces a growing demand from businesses that use cryptocurrencies not only as a means of accumulation and hodling, but also as a means of settlement. Then, perhaps, we’re going to face some challenges and have to make difficult choices…
NFTs: Are They a Danger to the Environment?
Not only Bitcoin faces criticism when it comes to environmental issues. There are several estimates on how much damage NFTs do to the environment. First of all, creating each NFT involves a number of transactions on the blockchain, and each individual transaction consumes thousands of times more energy than watching TV or surfing the Internet. In fact, one study estimated that the carbon footprint of a single NFT is equivalent to an EU resident’s monthly power consumption.
The problem is that NFTs are produced in thousands every day, and we’re not talking about those big pieces of art that are sold for incredible sums of money: NFTs are ownership certificates for all kinds of digital items, including music, videos, in-game items, and sports collectibles. They are the building blocks for metaverses and blockchain gaming – these two fields are becoming more and more popular.
At the moment, the market is dominated by Bitcoin and Ethereum, and the majority of NFTs are minted on the Ethereum blockchain. Using layer 2 solutions can somewhat reduce the environmental impact, but some time will pass before they become more trendy and widely accepted.
Green Crypto: What Are They?
Some time ago, Chia crypto made headlines when it was called ‘the greenest cryptocurrency’ and a great alternative to Bitcoin. Where Bitcoin uses Proof of Work, Chia applies the so-called Proof of Space and Time that uses excess storage and makes Chia more sustainable. Can it indeed be called an eco-friendly cryptocurrency?
The issue here is the hard drives that Chia’s Proof of Space and Time uses. They might reduce the need for energy, but they still have a waste of literal hard drives, and these break down very fast when you use them for mining. As a result, even Chia causes electronic waste. Apart from that, Chia is indeed one of the most efficient in terms of its energy requirements – only 0.023kWh. Others include IOTA (0.00011kWh) and XRP (0.0079 kWh).
So what is the ultimate eco cryptocurrency? Actually, there’s a number of them:
- Cardano: Cardano uses a Proof-of-Stake system called Ouroboros. This requires users to purchase tokens in order to join the network, saving significant amounts of energy.
- Nano: While this digital currency used the Proof-of-Work mechanism, it strives to reduce the waste that is often associated with crypto transactions and relies on the Open Representative Voting protocol to reduce energy use and increase efficiency.
- Algorand: Being a Proof-of-Stake blockchain, the Algorand network was designed from the ground up to minimally impact the environment. Because its consensus is not based on energy-intensive proof-of-work and requires minimal computational power or electricity, Algorand has been a leader in minimizing the environmental impact of blockchain technology.
Other green crypto currencies include popular digital assets like Stellar Lumens, XRP, IOTA and lesser known green cryptocurrencies, such as Solarcoin, BitGreen and many more.
The Environmental Issue: A Way Out?
A lot is being done to minimize the impact of crypto on the planet. For instance, Bitcoin developers are working on the Lightning Network. The aim is to reduce the energy demand of the network by moving most transactions off the blockchain. Ethereum has been working on a transition from Proof-of-Work to a Proof-of-Stake algorithm, as used by Algorand, Cardano, and Tezos, for several years.
The claim is that transition to the PoS consensus would reduce the network’s energy demand by 99%. Several blockchains, such as Solana (SOL) and Tezos (XTZ), consume a fraction of Ethereum’s energy and are starting to be used to mint NFTs. Luckily, the world of crypto keeps evolving, and it may very soon become way greener than it is now.
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How to Buy Crypto?
Just go to StealthEX and follow these easy steps:
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Don’t forget to do your own research before buying any crypto. The views and opinions expressed in this article are solely those of the author.cryptocurrency eco friendly crypto green energy SOL Solana