BLOCKCHAIN: As the price of bitcoin reaches new milestones and cryptocurrencies becoming more commonplace, the industry’s growing carbon footprint becomes more difficult to overlook.
Elon Musk revealed last week that Tesla is halting bitcoin vehicle sales due to the environmental effects of the fossil fuels used in bitcoin mining. We welcome this judgment, and it highlights the gravity of the situation: the industry must fix crypto sustainability now or risk stifling crypto creativity and development.
Bitcoin has a market capitalization of $1 trillion currently. When firms such as PayPal, Visa, and Square spend billions of dollars in cryptocurrency, market players must take the lead in significantly reducing the industry’s cumulative environmental effect.
Increased demand for cryptocurrency implies increased competitiveness and higher energy use by mining operators. For eg, when the price of electricity skyrocketed in the second half of February, we saw BTC’s electricity usage rise by more than 163 per cent — from 265 TWh to 433 TWh.
Sustainability has emerged as a major issue on the priorities of both global and local leaders. The Biden administration’s decision to rejoin the Paris climate agreement was the first hint of this, and we’ve also seen comments by many federal and state departments indicating how important it would be to solve the global climate problem.
A draft New York bill will ban cryptocurrency mining operations before the state can determine the maximum environmental effects. The Securities and Exchange Commission issued a request for public comment on environment disclosures earlier this year when consumers collectively seek to know what firms are doing in this regard, and Treasury Secretary Janet Yellen cautioned that the amount of electricity used in mining bitcoin is “staggering.” The United Kingdom unveiled proposals to cut greenhouse gas pollution by at least 68 per cent by 2030, and the prime minister initiated an aggressive green industrial revolution programme last year.
Cryptocurrency is here to stay— it is no longer debatable. It is bringing in real-world gains for both companies and customers, such as quicker, more efficient, and less expensive purchases with greater clarity than ever before. However, as the market matures, growth must be prioritized. It is better to create a more balanced environment now than it is to “reverse engineer” it later in life. The auto sector can be considered a canary in the blockchain markets: carmakers are already retrofitting lower-carbon and carbon-neutral technologies at considerable expense and inconvenience.
Participants in the market must aggressively collaborate to achieve a low-emissions future fueled by safe, green technology. The Crypto Climate Accord (CCA) was unveiled last month, with over 40 backers — including Ripple, the World Economic Forum, the Energy Web Foundation, the Rocky Mountain Institute, and ConsenSys — and the aim of enabling all of the world’s blockchains to be operated by 100 per cent renewables by 2025.
Although several market leaders are investigating clean energy options, the wider industry has a long way to go. Although 76 per cent of hashers claim to use green resources to fuel their operations, renewables account for just 39 per cent of overall hashing energy consumption.
To have a positive effect, the industry must develop an open and consistent standard for measuring renewable energy utilization and making renewable energy available and affordable to miners. The CCA is now developing such a norm. Furthermore, businesses will pay for high-quality pollution credits for remaining emissions — and perhaps also past emissions.
As the sector strives to become more competitive in the long run, there are green decisions that can be taken right now, and certain industry players are taking advantage of them. Stripe, for example, has developed carbon renewal services to allow its clients and associates to be more environmentally conscious.
To decarbonize every cryptocurrency, businesses may collaborate with organisations such as the Energy Web Foundation and the Renewable Energy Business Alliance. There are options available for anyone seeking alternative energy alternatives and high-quality carbon offsets. Other options include utilizing inherently low-carbon technologies, such as the XRP Ledger, that do not depend on proof-of-work (mining) to dramatically reduce pollution from blockchains and crypto finance.
The XRP Ledger is carbon-neutral and employs Federated Consensus, a confirmation and authentication algorithm that is nearly 120,000 times more energy-efficient than proof-of-work. Ethereum, the second-largest blockchain, is moving away from proof-of-work and toward proof-of-stake, a somewhat less energy-intensive authentication process. Proof-of-work schemes are inherently unreliable, requiring further resources to continue forward development.
Climate change’s devastation is spreading at an unprecedented rate. Making aspirational contributions to sustainability, or, worse, ignoring the issue, is insufficient. The sector, like the Paris agreement, needs real goals, concerted effort, creativity, and mutual responsibility.
The positive news is… Solutions may be realistic, market-driven, and generate demand and prosperity for all. Crypto, in collaboration with climate activists, renewable tech business executives, and global finance decision-makers, will place blockchain as the most sustainable way forward in building a green, digital financial future.