The world has been looking for eco-friendly cryptocurrency since the U.S. Bitcoin mining process produced 40 billion pounds of C02 in 2020. The impact of crypto mining on the environment has been devastating.
While blockchain activists focus on the positives of decentralization and ownership of transactions, they ignore the energy consumption that comes along. A study by Cambridge University, as part of the Cambridge Bitcoin Electricity Consumption Index, reported that Bitcoin mining required an electricity consumption of 133.68 TWh per year.
Countries like Sweden, Malaysia, and Ukraine have less annual energy consumption than Bitcoin. The coin leaves a carbon footprint of 549.74kg CO2 per year.
These numbers paint a haunting picture of the future environmental condition of the world. Nature Climate Change stated that Bitcoin mining alone could lead to a 2-degree rise in the global temperature.
Environmentally Friendly Cryptocurrency 2022
With increasing importance to ESG policies and global environmental health, miners are moving to green crypto mining methods, and investors are looking for sustainable cryptos to invest in. An article by Insider states that the green cryptocurrency industry expects to boast 100% energy-efficient cryptocurrency mining by 2030.
Cryptocurrency mining methods are adapting to make renewable energy crypto coins. Crypto Climate Accords have received 250 signatures from miners and corporations committing to forming an eco-friendly cryptocurrency list and decarbonizing the crypto mining space by 2040.
Why is cryptocurrency bad for the environment?
Experts evaluate the total cost to the environment for mining cryptos via various factors. It is the cumulative energy required in digitally mining cryptos, processing transactions, and running the respective hardware devices.
Non-renewable energy resources like coal fuel comprise around 40% of crypto mining energy needs. Massive amounts of e-waste are produced each day to add fuel to the fire. Vries’ (2019) study suggested that the hardware used to mine Bitcoin becomes waste in just 1.5 years.
Newer technological developments mean that older machines become obsolete and e-waste much quicker every day. It leads to a high generation of polluting elements that significantly affect the environment.
Currently, Bitcoin’s energy consumption is solely at par with Argentina’s, with a population of 45 million. The University of Columbia study added that U.S. demand for Bitcoin mining would increase by 6 GGW by mid-2023.
Proof-of-Work Systems
Bitcoin, Ether, and other significant cryptocurrencies use intricate Proof-Of-Work systems that require a large amount of energy for mining. The system is a decentralized mechanism that involves solving arbitrary mathematical puzzles.
Developers have been looking for greener validation methods to create the best crypto for the environment. Ethereum used to spend 62.77 TWh of energy annually. Dropping its PoW system, ETH reduced consumption by 99% to 0.01 TWh in September 2022, making it a sustainable crypto.
The environmental impact of cryptocurrencies such as bitcoin
CoinShare came out with a study that depicted the growing adoption of cryptocurrencies at a staggering annual rate of 113%. The rapid adoption rate drives the demand for Bitcoin and other major cryptocurrencies.
The increased demand leads to more intense mining and supply. Energy consumption is thereby driven up due to higher competition, especially in the PoW network. These massive cryptocurrencies are mined on farms consisting of thousands of ASIC servers costing up to $10,000.
The servers running unattended, coupled with the consistent production of e-waste, leads to a carbon footprint of 57 million tons annually. 33 million trees would be needed to offset this carbon production.
Countries that impact the most
The University of Cambridge study reported that most Bitcoin and cryptocurrency mining occurs in the U.S., China, and Kazakhstan. Collectively, they are responsible for 72% of the crypto supply in the world.
76% of the mining energy in China is generated from non-renewable, pollutant sources like coal and crude oil, as per the Center of Strategic and International Studies. Similarly, the other two countries’ mining activities run mainly on fossil fuels.
Is there an eco-friendly cryptocurrency?
Crypto mining’s environmental impact is no secret. So, are there any cryptocurrencies that are environmentally friendly? While the predominant validation system is currently Proof of Work, we are witnessing a shift to green crypto mining methods. Green cryptocurrency uses techniques like proof of stake or proof of burn for validation, expending less energy.
Proof of Stake Cryptos
Over 200 coins operate in the Proof of Stake framework, which involves miners using pre-owned coins for validating transactions. The coins are locked away to create a validator node that verifies trades. Solana uses the PoS system with a market value of $28.39 billion.
Complementary virtual sustainable crypto is also being set up, which promises to be better for the environment while still being decentralized.
Proof of Burn Cryptos
Integrating the value of Proof of Work and Proof of Stake, the PoB system involves validators burning a certain amount of crypto to create a virtual mining rig. The mining power is equivalent to the number of coins burned. This system allows miners to build coins without extensive energy expenditures.
While it hasn’t gained widespread acceptance as a validation method, Slim Coin does show an example of being built on this framework.
Proof of Capacity
Green cryptos rest on the foundation of Proof of Capacity systems. The process simplifies the complications and focuses on the available storage space on a miner’s hard drive. The amount of sustainable crypto users can mine depends upon the storage facilities they have to offer.
Coins like Chia, Burst, and Storj use this Proof of Capacity or space validatory methods to serve as a green crypto mining method.
5 Best crypto for the environment
With increasing environmental activism, investors are always wondering which is the greenest crypto that utilizes energy-efficient cryptocurrency mining. The future of cryptocurrencies is expected to be driven by this eco-friendly cryptocurrency list. The coins use effective and economical mining techniques that do not expend unnecessary energy.
Renewable energy crypto coins are technologically advanced and environmentally sustainable crypto investments. Analysts believe that these make a profitable, climate-friendly investment.
1. Algorand (ALGO)
The eco-friendly cryptocurrency announced in April 2021 that it had gone completely carbon neutral. ClimateTrade partnered with Algorand to make it a more sustainable crypto with a limited carbon footprint and energy use. The coin uses a Proof of Stake network to reduce its electricity consumption.
Algorand green crypto is built on a two-tiered blockchain network that solves the trilemma of achieving speed, security, and decentralization together. MIT Professor Silivia Micali launched the coin in June 2019 as an open-source network. The crypto recently saw a growth of 28% post its partnership with FIFA and a widening of TVL.
2. BitGreen (BITG)
BitGreen is a genuinely green crypto that incentivizes positive environmental change. The coin’s mobile wallet rewards users in BITG coins for eco-friendly steps and initiatives. The sustainable crypto aims to catalyze green projects and combat climate change by gathering $1 Trillion in 10 years.
Adam Carver, the CEO of Bitgreen, claims that the blockchain is focused on sustainability and financial inclusion at all levels. The crypto uses impact investing methods to induce the necessary environmental revolution.
The very foundation of Bitgreen is purpose-driven and built on meeting the needs of NGOs, ESG groups, or relevant Web3 domains. The BITG website states that it uses 99.9% less energy than its crypto counterparts.
3. Cardano (ADA)
One of the best cryptos for the environment is also the 8th largest coin in terms of market value. Cardano was founded by Charles Hokinson, the co-founder of Ethereum. The renewable energy crypto coins is the first to use a multi-layered blockchain technology integrated with Proof of Stake validation software.
The coin is part of the Net Zero Asset Management and aims to cut all carbon emissions by 2050. Reports suggest that ADA’s energy usage is just 0.01% of Bitcoin’s. Cardano does not use energy-intensive mining methods yet remains at a position and value comparable to the levels of Bitcoin and Ethereum.
With a market value of $16 billion, investors believe Cardano is one of the safest green crypto investments. The sustainable crypto is based on energy-efficient cryptocurrency mining steps to scale and develop further.
4. Chia (XCH)
Although Chia is not as much a green crypto as the rest, the coin is far-less energy intensive in its mining process. Founded by Bram Cohen of BitTorrent, the crypto is mined on the inclusive Amazon Web Services platform. Users farm XCH by running the decentralized platform on their devices.
In line with other sustainable cryptos, Chia employs the Proof Of Space network to minimize its carbon footprint. As per the Chia whitepaper, the token aims to better the infrastructure of the governmental and financial institutions.
5. Devvio
DevvX blockchain operating under Devvio was found to use 3.5 billion times less energy than Bitcoin per transaction. CEO Tom Anderson claims that the blockchain can handle 8 million transactions per second. DevvX is reportedly the fastest in transaction speeds while also being cheaper than the ETH and BTC networks.
The Ecofriendly cryptocurrency is an enterprise blockchain built for ESG solutions, NFTs, IoT, and asset records or management networks. The coin uses the only ISO-compliant green blockchain network with humanitarian goals. DevvX runs on a Proof of Validation protocol and suppresses workload and energy usage by partitioning its distributed ledger.
Conclusion
TRG Datacenters suggest that we will see further developments in energy-efficient cryptocurrency mining. Out of 4,500 cryptocurrencies, the blockchain network is moving away from energy-extensive PoW systems and identifying sustainable crypto opportunities.
The Crypto Climate Accord is witnessing new signatories as technology progresses. Experts believe that the blockchain network is moving towards becoming utterly carbon-free by 2040.
ETH has reduced its footprint by 99.9% and joined the eco-friendly cryptocurrency list. In a recent survey, the Bitcoin Mining Council claimed its users were mining with a 67% renewable energy mix. While the problem of e-waste remains, the new consensus mechanisms are expected to drive down the demand for large mining rigs.
