Sustainable cryptocurrency is a concept that not everyone knows. This is due to the fact that people have always known crypto and blockchain to be detrimental to the environment and that is actually the case. However, with time people have understood the need for the management of this. This is one of the main reasons why concepts like sustainable blockchain and cryptocurrency have come into existence.
Why Is Sustainable Cryptocurrency Needed?
Cryptocurrencies and blockchain have been known to have a detrimental impact on the environment, which is due to the amount of energy these technologies consume. It is estimated that Bitcoin mining operations use about 91 terawatt-hours of electricity on an annual basis, which is huge. Experts have time and again warned about the excessive electricity consumption, which is indeed harmful to the environment in general. Along similar lines, the global blockchain leader at FY, Paul Brody, said that:
“Of course, this is wasteful in the sense that 99.99% of all the machines that did work just throw away the result since they didn’t win the race. I very much doubt (whoever founded) Bitcoin anticipated such enormous success in the future and, consequently, the enormous amounts of power we’re talking about.”
Moreover, researchers have made considerable efforts in trying to find a solution to the massive energy consumption that Bitcoin mining has been known for. However, they have still not been able to find the exact solution to the problem. The crypto domain has been using the potential of artificial intelligence as well, which is a complex technology and uses further energy. Making sustainable cryptocurrency mainstream is needed to manage the damage that is being caused to the environment due to the footprint that they leave. In addition, it is important that sustainable blockchain development is also considered.
Sustainable energy crypto options have been designed in a manner that they either use clean energy or encourage people to use lesser amounts of energy and participate in activities that are good for the environment. It is important that the massive amounts of mining activities in the domain are curbed. This is due to the fact that they use a massive amount of energy (that is powered by non-renewable resources), thus depleting such resources. This puts additional pressure on the environment and nature to replenish those resources quicker than the normal rate. Therefore, the need for the adoption of sustainable crypto increases.
The huge amounts of energy that are being used by miners to mine newer coins have resulted in a lot of power consumption as these new-age miners use super-powered computer mining rigs for this operation. This is what boosts the need for energy consumption. Along similar lines, Professor Barney Tan, Head of School and Professor of Information Systems and Technology Management at UNSW Business School, noted that:
“So if 1000 miners compete and only one would win the reward, the resources invested by the other 999 miners who lost are wasted. Think about the scenario above… if we have 1000 miners but no need to compete, resource consumption would immediately be reduced by 99.9 per cent”
Another reason why mining requires enormous amounts of energy is that it works on the concept of Proof-of-Work (PoW). The PoW algorithm is very complicated and is executed after considering a lot of operations, which is why it is known to have consumed an immense amount of energy when Bitcoin mining is considered. This is also because of the fact that it works on the blocks of the blockchain that are essential for miners. They are literally fighting for getting their share of crypto coins, thus generating more energy due to the usage of high computing power. Professor Tan highlighted the need for sustainable blockchain options and commented that:
“Ethereum is trying to address this by moving into what is called ‘proof-of-stake’, which means you don’t have miners that are competing against one another, but the percentage of blocks that you are allowed to mine is tied to your current stake in the cryptocurrency network.”
In case, sustainable cryptocurrency is used in a conventional way, it might be a great alternative as most of them would harness the PoW algorithm. In addition, there are digital currencies that are sustainable in nature as they use scalability features that make them energy-efficient. Sustainable cryptocurrencies are one that also might try using the power that is generated from renewable resources, which would be beneficial for the environment.
Blockchain and Artificial Intelligence
Professor Tan noted that any kind of technological advancement in today’s world has been negatively impacting the environment in some or the other manner. When the crypto domain (blockchain) and artificial intelligence come together, the combination leads to further damage as well. Professor went on to explain this by saying:
“All forms of technological innovations, by virtue of being computer-based, are always going to have a significant carbon footprint. But this is not to say that all of them should be stifled in the name of environmental protection, but rather that sustainability should be one of the foremost concerns alongside the economic benefits that they can generate.”
According to data compiled recently, training a single AI has been known to use about 284 tonnes of carbon dioxide. This metric is about five times more than the lifetime emission made by an average car. This is therefore a matter of concern, isn’t it? In the crypto space, this technology has been known to aid in price forecasts and ascertaining information about the trends in the market. Moreover, it is not that just a few people have been using it. Due to the use by so many people, the carbon emissions are higher. Professor commented on this noting:
“Now if you multiply this by the number of AI models a firm could create and the number of firms that would do so as the adoption of AI grows, it is a daunting prospect.”
Prof Tan then explained the fact that harnessing AI models along with blockchain would require large data sets and said:
“You have to build very powerful computers, as well as collect and store massive amounts of data for the models to work well. All of these will consume a lot of energy with obvious environmental implications.”
However, it is not true that AI is always hazardous to the environment and works against sustainability. There are a lot of innovations in the sector that are used to reduce carbon footprint. For instance, Google, the tech company, has been using its AI to reduce the environmental impact due to them. But yes, we cannot forget the fact that most of the AI models that have been designed and will be designed in the future would not consider this type of mechanism. Professor remarked on this and said:
“AI will mostly be leveraged to help a business outperform its competitors across a number of applications. So, I would say that the overall impact of AI on the environment is very likely to be net negative.”
The inclusion of AI in the blockchain world is proven to be hazardous to the environment in many ways. Therefore, if sustainable energy crypto options are given priority more than the ones that have been using enormous amounts of energy then things might be different. These sustainable cryptocurrency options would be able to curb the damage that is caused overall.
Sustainable Cryptocurrencies: The Solution To Above-Mentioned Problems.
Sustainable cryptocurrencies are known to be using less energy than digital currencies like Bitcoin (BTC). Companies have launched such cryptocurrencies that have been designed in a way that they use lesser energy and if possible, harness renewable energies. These sustainable cryptocurrencies are not mined that often as they are not known about to many. However, this concept should be shared with people on a larger basis. If such cryptos are launched in larger amounts, then they might aid the environment by reducing the amount of energy that is being exhausted by the crypto domain. Some prominent sustainable energy crypto options have been listed here:
- SolarCoin (SLR): It is a sustainable crypto wherein 1 such coin is generated using a Megawatt hour generated from solar energy. Thus, making it one of the cryptocurrencies that work on clean energy.
- Powerledger (POWR): It has integrated several technologies ranging from the scalability of the Solana code base to Safecoin’s voter subset consensus to be energy efficient. This reduces the amount of energy it consumes compared to cryptos like Bitcoin.
- Eco Coin (EVC): This sustainable crypto is awarded as a reward to people who participate in environmental workshops that are undertaken by the Eco Coin Network. This is their way of encouraging people to do good for the environment as a whole.
- Cardano (ADA): It uses a Proof-of-Stake (PoS) algorithm that requires one to purchase a token to be able to participate in the network. It saves enormous energy amounts and the CEO of this network claims that it only uses 6 GWh of power.
- EOSIO (EOS): It is another sustainable cryptocurrency that works on a PoS consensus mechanism that is indeed energy efficient, which is quite similar to Cardano. The platform utilizes its pre-mined tokens for staking purposes.
A Green Wrap-Up!
Sustainable cryptocurrency is very important to be involved in the mainstream. This is due to the reason that crypto mining, especially Bitcoin mining, requires massive amounts of energy that is detrimental to environmental sustainability. Also, we should take into consideration that artificial intelligence can be used for the good rather than burdening non-renewable resources for extreme energy consumption. Some sustainable energy crypto options also encourage people to do something that is useful for the environment. Thus, increasing community participation in saving nature. Therefore, people and crypto enthusiasts should try investing in sustainable cryptocurrencies.