These concerns are by no means unfounded — mining cryptocurrencies is often an extremely energy intensive process. Similarly, the level of computational power required by a decentralized financial network to validate transactions and allow cryptocurrencies to function takes plenty of power to run.
Does that mean that crypto and blockchain technologies are inherently environmentally destructive? At first glance, many people are indeed concerned this is the case.
Yet dig a little deeper, as we are about to, and you’ll find that a green crypto space is not only possible — it’s being developed all around us all the time, with fantastically promising results.
It’s a good idea to fully grasp the environmental concerns placed against cryptocurrencies, before going over the solutions that exist today. In short, much of the concern regarding the crypto world today comes down to the energy consumption of the mining process.
This requirement for incredibly high electricity use was not the intended route for cryptocurrencies to take, nor the goal of Satoshi Nakamoto when they anonymously invented Bitcoin.
Bitcoin and other proof-of-work cryptocurrencies — crypto assets that create their value through the ‘mining’ process — are added to their respective blockchain networks through complicated computer algorithms.
Computers that tackle those problems — often called ‘mining rigs’ — are designed to maximize their profitability by being developed with specific components. These alone are costly and use high-end materials, such as advanced video graphics cards that’d ordinarily only be the purview of hobbyist computer gamers or the like.
These materials alone require a lot of physical material that almost every industry in the world is crying out for, not just crypto. However, as mining cryptocurrencies — that is, connecting advanced computers to blockchain networks to solve mathematical problems — has become more popular around the world, the complexity of the algorithms being solved has increased.
Because that difficulty and complexity has increased, it has created something of an inadvertent arms race for enthusiasts and businesses to invest in even more advanced technology to keep mining. The better mining tech gets, the harder the mining problems get, and so the cycle goes.
Why is this bad for the environment? Even one advanced graphics card uses a tremendous amount of electricity. Imagine hundreds, thousands of those computer cards being deployed at scale — as well as machinery specifically set up to control their temperatures and stop them from overheating.
That’s an incredible amount of energy — and it’s only getting bigger.
Nobody has set out into the crypto mining industry to cause environmental harm. It’s easy to set up a computer network, switch it on, leave it running and not necessarily think of the ramifications on energy consumption involved.
The issue largely lies in the fact that much of the world’s energy infrastructure relies on fossil fuels to this day, despite continuous climate warnings. Are the failings of crypto to not use ubiquitous national and international infrastructure really reasonable and realistic?
Either way, alternatives are coming to the fore — and many cryptocurrencies are being created today specifically to sidestep environmentally damaging energy consumption.
Enough doom and gloom, then. Let’s examine the successful ways in which both established and new cryptocurrencies are going green in an inspiring way.
While we may never know who Satoshi Nakamoto truly is — making speculating on their intentions a tricky business — it’s safe to assume they did not foresee back in the Aughts that Bitcoin mining would become an entire industry in and of itself.
It’s due to this — and the sheer amount of energy that Bitcoin mining consumes in order to keep pace with the difficulty of the blockchain mining process — that makes so many people concerned.
But as our own civilization proves, when an industry gets big enough, it begins to innovate in exciting new ways. The same is true of Bitcoin mining, whose power consumption is so high that it has bred green innovation galore.
In fact, 57% of crypto mining is done using renewable energy today. That’s an outstanding statistic, and one that is also growing.
Not only that, but these energy innovations are not happening in a vacuum — cryptocurrency mining is basically rewriting the rules for how to run an industry on green energy, and other industries worldwide are being encouraged to take notice.
The mining process of cryptocurrencies is what is known as the proof-of-work concept — the value is created on the blockchain by a computer correctly solving an algorithmic problem and declaring that to the network.
Since cryptocurrencies were invented, technology and the philosophy around what makes crypto valuable has evolved. That’s why the rise in proof of stake has become so popular — but it has also gained traction because of how energy efficient it is versus mining.
Most famously, Ethereum — the second most popular cryptocurrency in the world — is shifting from proof-of-work to proof-of-stake to not only be more inclusive to different people with different computer hardware, but also implicitly to make Ethereum a more energy efficient cryptocurrency.
Because so many other cryptocurrency altcoins use the Ethereum Network, this has a radical and revolutionary effect on the entire crypto ecosystem — not to mention that of our planet.
Bringing green thinking into the crypto world isn’t just about changing how the value is calculated or the technology that fuels its computing power.
In fact, many cryptocurrencies today are being developed with the express intention of either enabling environmental innovations, or simply using far less energy in their value and exchange protocols.
The smart thinking behind SolarCoin provides an added incentive to those of us who are already generating solar energy at our homes and businesses. Using the decentralized thinking behind much of the crypto market, SolarCoin takes solar energy in an exciting new direction.
SolarCoin provides blockchain cryptocurrency tokens on the Ethereum Network in exchange for verified solar electricity generation. This essentially pays individuals for generating solar power, adding plenty of incentives to an already wholesome process.
The goal of Solarcoin is to make it free, or even profitable, for individuals to generate solar electricity for the world. It’s a grand ambition, but represents the kind of refreshing thinking we all need to keep our planet’s environment safe.
Some cryptocurrencies designed to overcome the difficult issues surrounding energy consumption simply use blockchain programming that negates the need for excessive energy use altogether.
Nano is a superb example — it’s still a decentralized cryptocurrency, yet the means by which exchanges are validated on the network uses far less energy than almost any other crypto asset ever created.
While sustainability in Nano is an awesome goal, the cryptocurrency was also created to be more practical. When Nano is spent or received, there are zero fees whatsoever for using the network — pretty appealing to plenty of customers and businesses alike.
Bitcoin mining is a process that largely uses the power of a computer graphics card to achieve results. Other cryptocurrencies, such as Monero, use the computer’s CPU instead — with the aim of being more realistically attainable to a bigger user base.
While admirable in practice, the rise of Monero mining caused the same expensive and high end hardware in CPUs to become required to stay profitable — essentially an echo of the Bitcoin graphics card arms race.
Changing the game altogether, Chia is a cryptocurrency that abandons the need for mining on energy intensive computer hardware. While following suit in making cryptocurrency mining more accessible to more people, Chia simply uses hard drive space for mining and transactions.
While this has had the predictable result of driving up demand for big hard drives, Chia’s choice of technology nevertheless is not as power-hungry as server rooms packed with graphics cards or dedicated ASIC miners.
Although only created in 2019, Algorand has become not only a popular cryptocurrency — but also a shining example of environmentally friendly thinking in a successful blockchain asset.
Algorand has used an extremely energy efficient proof-of-stake consensus system since the very beginning. Its creators have directly stated on numerous occasions that they want Algorand to be not only a carbon neutral cryptocurrency — but in fact a carbon negative one.
To meet this goal, Algorand and its team often reaches out to corporations worldwide to find ways to drive environmentalism forward. The underlying technology helps to ensure Algorand nodes and exchanges generate barely any energy demand — but the idea of actually reversing carbon footprints altogether is just as exciting.
While many computer scientists and software engineers are incredibly excited about Web3 today, the fact that so much of that ambition requires blockchain technology has caused some critics to point out that the energy cost of Web3 is far too high to ever be realistic.
Not content to let the dream die so soon, Mina was created as a blockchain token solution that uses mere kilobytes of computing power. Blockchains increase dramatically in size over time — the blockchains of Bitcoin and Ethereum are hundreds of gigabytes today — while Mina’s is locked to never rise above around 22 kilobytes.
To put that in perspective, the word processor document that went into creating today’s article probably has a larger file size than the entire Mina blockchain file.
Is the choice to have a smaller blockchain simply one of efficiency? Not at all — by using less computing power, Mina is not only fast, but uses far less electricity than almost any other crypto asset in the world today.
While many of the green crypto assets we are discussing today are designed to have far more energy efficient blockchains, GreenTrust goes a step further still.
While the technology powering its blockchain is carbon neutral, the token itself is designed to empower and inspire businesses and individuals of all kinds to offset their carbon footprints.
The organization behind GreenTrust takes pragmatic steps to improve the environment too, scaling directly with how much the GreenTrust cryptocurrency network grows. For every 600 GNT transactions, a tree is planted.
As concerns about the planet’s environment continue growing every day, what does the future hold for energy efficiency, environmentalism and their relationship with cryptocurrencies today?
The great news is that even the green cryptocurrencies we have discussed today are just a few of the ongoing innovations happening with energy efficient blockchain technology development.
However, these incredible steps forward come with a caveat — when people think of crypto, they think of Bitcoin first and foremost. The world’s biggest cryptocurrency is also the one that started it all, and that means that the spotlight is on Bitcoin more than anywhere else.
While these green crypto assets fight for market share and the positive renown in the media that they deserve, Bitcoin will continue drawing headlines for good and for ill — and that means greener energy must continue becoming the norm.
The steps being taken by Bitcoin mining as an industry today towards sustainable energy sources are remarkably inspiring. Better still will be if the innovations being put forward by crypto mining in energy efficient ways spread over to other energy intensive industries, too.
Similarly, the shift from Ethereum to the more energy efficient proof-of-stake protocol means that the world’s second most popular cryptocurrency — and all the assets using its network — have far more mainstream appeal.
Going hand in hand with that is a far more energy efficient way for new coins to enter the Ethereum ecosystem, redefining that entire blockchain almost overnight.
These are definitely exciting times for environmental thinking in cryptocurrency — but make no mistake, this is no time for anyone to rest on our laurels either. Consistent innovation will make crypto green through and through — but there is still much work to be done.
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