Illustration by Giorgi Sisauri
From simply existing, cryptocurrencies like Bitcoin, use an astonishing amount of energy. As well as produce electronic waste from the mining process.
Even though the mainstreaming of crypto has transformed the economics of banking, gaming, shopping, entertainment, and even human interactions, at the same time, it is a big deal for the environment.
Crypto is energy-intensive by design, and is currently mined by thousands of high-powered computers in the world. The mining process uses huge amounts of electricity to power complex algorithms and consumes non-renewable energy sources (such as coal). One Bitcoin transaction uses 707 kWh of electricity and emits 1,061 pounds (half a ton) of CO2. Every day around 200,000 bitcoin transactions take place.
So is there any way to make these digital assets more sustainable? In this post, we’ll discuss sustainability regarding cryptocurrencies and how you can identify “green” coins.
You can tell which coins are more sustainable by inspecting the way they are mined.
Bitcoin uses a mining process called ‘proof-of-work’, which requires them to use their computers to solve a series of complicated codes that get increasingly difficult and consume more energy over time. This is the reason why Bitcoin is so energy-intensive.
More recent cryptos use a system called ‘proof-of-stake’. Proof of stake requires participants to put cryptocurrency as collateral for the opportunity to successfully approve transactions, which is a bit like voting.
The block creation process depends on wealth rather than computational power. A proof-of-stake network can require 99.95% less energy than a proof-of-work network, however it is considered less secure.
There are also alternatives like proof-of-storage and block-lattice cryptos which are all less energy-intensive than proof-of-work (PoW). So the first and most important thing to do if you want to invest sustainably is crossing out any coins that use the PoW network.
The question is: “Can coin mining switch from fossil fuel to renewable energy?”
One possible solution to lessen crypto’s environmental impact is to make sure they are mined using renewable energy.
Many miners have set up their mining farms in countries where geothermal and hydroelectric energy are plentiful and inexpensive, like Iceland and Paraguay. Coins mined in these countries will have a remarkably lower carbon footprint.
The mainstreaming of crypto and the temptation of governments to make it a legal tender have also triggered the need for stricter policies and penalties for breaches of environmental laws. All miners will have to switch to renewables to stay in business.
However, crypto mining requires a considerable and steady flow of power to operate, which is still better supplied by 24/7 sources like coal and nuclear power. And even if a PoW crypto uses renewable energy, it’s still diverting that energy away from where it could be better in use, like power homes.
Conclusion: The switch to green mining is unlikely to take place right away; fossil fuels will remain cheap for the foreseeable future, and better renewable technologies take time to develop. For now, it is best to stay away from bitcoin and other PoW coins.
Created by the BitTorrent founder Bram Cohen, Chia is an interesting coin in that it can be “farmed” on Amazon Web Services cloud computing platform. Chia network relies on proof-of-space-time - storing certain amount of data over a certain period of time can earn you XCH.
Cardano is the world's first peer-reviewed blockchain, and it has the ability to process 1000 transactions per second compared to Bitcoin’s 7 transitions a second. Cardano uses a PoS network. The founder of Cardano, which is Ethereum co-founder Charles Hoskinson, claimed that the cryptocurrency network consumes only 6 GWh of power.
Nano uses block lattice technology and a system called Open Representative Voting, where account holders vote for their chosen representative, who then work to securely confirm blocks of transactions.
This cryptocurrency generates new coins for every megawatt hour generated from solar technology, rewarding miners for using the renewable energy source. The network requires users to upload documentation of energy generation in order to receive coins.
This cryptocurrency project seeks to help users move money between digital currencies and more traditional financial institutions. It uses its own coin, Stellar Lumens, to facilitate these transactions, and it uses a method of consensus algorithm with a small carbon footprint to do it.
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