“The earth is what we all have in common.” True that!
We all have the responsibility to build, hold and create a green future – for us, to us. Although we are running towards the fast-growing tech space, it is always essential to parallelly focus and work towards a clean, green future. Be it, Blockchain or Bitcoin, all the technology and energy should be utilized for the environment’s good.
Still, there’s the burning debate going on around Bitcoin and its carbon footprint. The world has been discussing about cryptocurrencies and the energy they consume. From pillar to post, discussions are still ongoing about crypto’s environmental impact.
Well, cryptocurrency is still in its very early stage but growing at a fast pace. There are more significant moves and broader possibilities already in the crypto space. On the other hand, it also has pitfalls. Industries are trying to understand and analyze what best crypto could do and how best it could work.
Bitcoin usually consumes a lot of energy. The proof-of-work consensus algorithms, i.e., the mathematical problems that Bitcoin miners must solve, require energy. At the same time, the argument about Bitcoin’s environmental impact indefinitely is that the broader crypto ecosystem is in the course of moving towards a cleaner, greener, and sustainable future that results in lower carbon emissions.
This gigantic move can be seen with the launch of Ethereum 2.0 with its proof of stake model. Bitcoin’s usual proof of work (PoW) consensus mechanism refers to the decentralized system, a model that requires enormous amounts of energy to validate transactions and new tokens.
While PoS allows miners to mine and validate block transactions based on the number of coins they hold, unlike PoW, it requires lower hardware requirements. A few forecasting models suggest that Ethereum 2.0’s PoS model will be 99% more energy-efficient than PoW models. As a result, it shows what we can expect from the PoS, with the Ethereum network consuming almost 100 Twh less than the Bitcoin network. In the consensus revolution, Cardano, Polkadot, EOS, and Cosmos are also the next-gen blockchains implementing their own PoS.
It is also essential to understand that most of the electricity used for crypto mining comes from renewable sources, and so suggests the data.
“The University of Cambridge’s research suggests that the renewable share of these energy mining pools is as high as 78%. Although this could change depending upon the region of the world, hydroelectric power, in particular, is rapidly emerging as the de facto power source for crypto-mining operations.” The crypto miners have gone an extra mile by using excess electricity or unused renewable energy that would otherwise go to waste.
Well, the flabbergasting thing here is that the traditional international financial system uses significantly more energy than the Bitcoin network. The global banking network that includes banking data centers, card network data centers, ATMs, and bank branches utilize energy. Indeed, traditional financial institutions provide billions of dollars to companies extracting and burning the earth’s most polluting resources. It means they are eventually supporting the most environmentally damaging projects on earth.
If we are here talking about this, we should understand that gold mining is an ecologically destructive force. The World Gold Council also acknowledged that the metal’s massive carbon footprint and highlighted the industry’s emissions need to fall by 80% over the next 30 years to meet the Paris Climate Agreement targets.
Randy Smallwood, Chair of the World Gold Council and CEO and President at Wheaton Precious Metals, commented: “While climate change is a global challenge, it is also an opportunity for the gold mining sector to reduce its greenhouse gas emissions by transitioning to renewable energy sources, which isn’t just good for the environment, it’s also good for all stakeholders.
So, suppose we really understand that traditional finance and mining account for a significantly larger share of greenhouse gas emissions than crypto. In that case, we should definitely look at the crypto and blockchain as the real transformative force that is slashing operational costs and ensuring transparency and traceability instantly. This is the most prominent revolutionary moment that needs to be acknowledged and celebrated.
Blockchain technology is no far from all of us. It is very much dearly bringing in a lot of innovations. There several use cases coming from different sectors. Blockchain is everywhere, from wholesale electricity distribution and peer-to-peer energy trading to electricity data management and commodity trading.
However, with the transition between polluting fossil fuels and clean, renewable energy, there is a necessity to streamline the processes in extracting, utilizing, and transporting the energy. Blockchain is accurate, fast, efficient and transparent, and of course, traceable.
One real-world use case involves the major Indian steel conglomerate Tata Steel in collaboration with HSBC working towards dealing a paperless trade deal. This enables smart contracts on the blockchain while exporting raw materials across the globe while cutting the contract settlement times, which almost took weeks or days to settle. So imagine how much energy is saved and stored now.
On the other hand, we have the Carbon Utility Token (CUT), which builds a cleaner future with a growing class of green assets. This will help corporations manage their carbon allowances. The sale of each CUT token represents a major step towards carbon neutrality in the crypto ecosystem. The sale also contributes towards investments in carbon capture through carbon offsetting programs.
Although there are specific challenges for crypto and blockchain, they also have the great potential to deal with them all. They would definitely lead us towards a greener planet while embracing clean energy sources.