Blockchain has been touted to offer speed, efficiency, and low costs. There is also a negative side to blockchain technology. The negative aspects of crypto technology are becoming more mainstream as the industry booms, including DeFi and NFT.
The environment’s impact is increasing. The use of blockchain to store energy is huge and it is increasing every day. The combating the climate crisis is a top priority around the globe. Particularly the electricity consumption of Bitcoin and othercryptocurrencies.
Similar blockchain networks have been able to get involved in a wider discussion on sustainability. This is why it is important to understand the basics of blockchain. But, is there a way to decrease that? Could blockchain also help to improve the situation?
Climate change?
Clean-up crypto mining
A recent hearing of the US committee of Energy and Commercial Staff on Cleaning Up Cryptocurrency – The Energy Impacts of Blockchain revealed a very dark picture. Many blockchains are still being used, including the two most popular platforms, Ethereum and Bitcoin.
To support their resp., a Proof-of-Work (PoW), mechanism is used. Crypto currencies require huge amounts of energy to function. According to recent research, the energy required to process a Bitcoin transaction could power a household’s needs for more than 70 consecutive days.
How does mining work
The infrastructure of the Bitcoin blockchain platform is distributed and delegated among the network’s miners. Every transaction must reach consensus in the distributed database before it can be processed.
For security reasons. This is done via Proof-of-Work (PoW).
These miners are responsible for adding transactions to the blockchain and processing transactions. These super-users compete to get the processing work. They try to solve extremely complex algorithmic problems. Mining PoW crypto currencies is not possible without a computer.
Specialized computers that make trillions upon trillions of guesses every second. In return for processing, the winner is given new cryptocurrencies (i.e. Bitcoin or Ether. It all comes down the most powerful computer processor working the hardest.
The network computers then verify the block and add it to the blockchain. After that, the mining process is re-started. It is very energy-intensive.
By increasing the number of guesses, crypto miners can increase their probability of identifying the correct answer. This increases computational power and increases energy consumption. PoW miners require a lot of so-called “guests” today.
ASICS (application-specific integrated Circuits) are necessary to be able to earn reliable earnings cryptocurrency rewards on the major cryptocurrency network. It is essential that mining profitability and the value of PoW currency currencies increase in an ever-increasing manner.
It takes a lot of energy to cool and power machines.
Environmental impact
There are many cryptocurrencies out there, but Bitcoin and Ethereum are the most popular. They are also the most energy-intensive. Their environmental impact has increased dramatically over the past few decades in terms of both energy and consumption.
Carbon or CO2 emissions
Energy consumption
The increased mining value has prompted a significant increase in the size of mining. This has resulted a rapid rise in energy consumption. According to the Bitcoin/Ethereum Energy Consumption Index that is looking at the environmental impact
Bitcoin is the most energy-intensive mining process for a blockchain transaction.
A single Bitcoin transaction uses as much energy as one US household would over 73.82 days (2.5 months). Last year, the annual energy consumption of the Bitcoin network grew from 78 Tera (trillion), watt-hours to almost 198 TWH.
Ethereum, while less energy demanding, still uses This is as much electricity for a single transaction as a US household over 8.32 days. The Ethereum network has seen its annual energy usage increase from 15 to 92 TWH to more than 92TWH.
CO2 emission
Bitcoin is also the most polluting cryptocurrency. Based on 2021 estimates, Bitcoin mining contributed more than 56.8 millions tons of CO2 to the atmosphere (or more that 1.000 pounds CO2 per transaction). This would require more.
To offset the transactions, 284 millions trees will be planted to become carbon neutral. Its annual energy consumption is similar to Thailand, while Bitcoin emits more CO2 than Kuwait.
ETH mining emitted more CO2 than 22 million tons (or more than 90 pounds per transaction). That is almost as much power as the Netherlands over the course of the year. It is expected to emit 22 million tonnes of CO2 by 2021. This would require a lot of planting.
Nearly 110 million trees are needed to offset Ehtereums carbon emissions.
Both blockchains, taken together, use significant economy-amounts energy. These are just ahead of Saudi Arabia and Italy and just behind the United Kingdom. It would be the 12th-most consumptive country on the planet.
These figures are meant to be compared with the 2021 global CO2 emission from Bitcoin and Ethereum mining. It is equivalent in volume to the emissions from more than 15.5million gasoline-powered cars each year.
Bitcoin mining ban
A growing number of countries are now planning or banning crypto mining, as they fear that there will be too little energy left for consumers and the wider industry.
Authorities in China banned mining last year, as China is home to 70% of all miners worldwide. Since crypto mining is a majority in countries with lower energy prices, the high energy costs caused by the Russian Ukrainian crisis has led to a shift of crypto mining to lower energy-priced countries.
These countries, such as Kazakhstan and Kosovo had to ban crypto-mining. India and Iran also had to ban it. Russia announced this ban in early 2015 to stop winter blockheads. A representative of the EU’s ESMA suggested that crypto mining should also be banned. It is possible.
It is likely that other countries will follow.
Ethereum: Ethereum moves from Proof-of-Work, (PoW), to Proof-of-Stake, (PoS).
However, there are also positive developments in blockchain technology that help combat climate change. Blockchain technology is still in its infancy, but it is rapidly developing. Crypto mining is now driven more by renewable energy, although slowly. And in the
meantime there is a number of other ground-breaking energy-saving solutions.
Proof-of State networks
One promising option is the transition from Proof-of-Work to Proof-of-Stake networks. These networks do not require miners that they compete for energy power in order to receive zero-sum awards. This could significantly reduce energy consumption and carbon emissions, thus reducing the greenhouse gasses.
Negative impact of blockchain technology on the environment
The proof-of-stake blockchain is a newer generation network. PoS uses a network of validators instead of miners. They will stake their own cryptocurrency for the ability to validate transactions in return for a reward. In other words, the resource is actually the miner.
Capital is replacing energy.
Ethereum 2
Ethereum is now moving ahead with their transition from Ethereum 1, (Proof of Work), to Ethereum 2, (Proof of Stake). This shift will make Ethereum’s blockchain safer and reduce energy consumption. Other important
PoS networks now include, among other things, the names Polkadot (Cardano), and Tezos (among others).
UCL (University College London), research shows that all proof-of–stake networks use less energy than Bitcoin’s proof-of–work (PoW), network Bitcoin. This is based on the number of transactions the network can perform at any given time.
Bitcoin is only two to three orders magnitudes smaller than Bitcoin. According to the same research, PoS-based systems can help address the challenges posed climate change and could even reduce the energy requirements of traditional central payment systems. This raises hopes that blockchain will soon be able to compete with Bitcoin.
Technology can be a positive tool in combating climate change.
Green smart contracts: Blockchain and environmental projects
There is a positive side to blockchain technology that deals with climate change and the environment. By using green smart contracts, blockchain technology could be linked to many environmental projects.
Green smart contracts
Green smart contracts that run on blockchain could open up new ways of fighting climate change and coping with its impacts. Global consumption habits must change in order to combat climate change. Green smart contracts
This is a great tool to encourage participation in global green initiatives. Particularly in areas that require large amounts of data collection and verification. Reward sustainable environmental behaviours with carbon credits, regenerative agriculture, and carbon
offsets, crop insurance etc. Green smart contracts could deliver great promises for environmental issues as these could scale up environmentally conscious blockchain-based solutions. The blockchain could play an important role in reversing the climate change.
Change can only be achieved if it is done on a global level.
Ethereum: DApps & Oracles
The Ethereum platform allows for the creation of decentralised apps on the blockchain. These applications include the management and recycling of supply chains, energy systems, energy systems, and environmental treaties.
carbon taxes. These can all make it easier to address environmental issues such as ocean sustainability and air pollution.
This approach relies on networks made up of so-called “oracles”, entities that can share data from the world. As oracles became production-ready, the development of green smart contracts gained momentum. These oracles broadcast agricultural data sets today.
Blockchains allow smart contract developers to create applications around crop yields and soil quality, weather reports and carbon offsets, etc.
As more and more data sets are fed into blockchains, developers are beginning to produce a wide range of environmentally-conscious smart contracts applications, helping fight against climate change, reduce carbon footprints, sustainable conscious consumption,
improve consumption habits etc.
New generation consumers and crypto: Towards a more environmentally conscious approach
New developments, such as the dramatic growth of DeFi, cryptocurrency’s firm rise, and the growing market in NFTs, have attracted many New Generations, especially Millennials, and Gen Z. This group is looking to experiment and seek out new opportunities.
With these more appealing digital and crypto assets. While many are concerned about climate change and the consequences, the majority of them don’t realize the impact of crypto on the environment. It would be a good idea to explore more about crypto and blockchain.
This could be a good idea, as it could lead to a more environmentally conscious approach.
