The Top 5: Cryptocurrencies Seeking A Greenwash

Highlights :

  • More than 4,500 mineable coins and tokens exist today
  • Bitcoin, largest of the world’s cryptocurrencies, emits 65 megatons of carbon dioxide into the atmosphere annually

Bitcoin’s environmental impact has been a talking point for a while now. From being compared to the energy consumption of whole countries to the impact of such consumption to climate change, the high energy use has been the biggest, and easiest stick to beat it up with.

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Similarly, the carbon footprint of the many other cryptocurrencies is huge, and investors all across the globe are in favour of greener options. More than 4,500 mineable coins and tokens exist today, posing a major question on the sustainability of the process. Not just mining, even the transactions require electricity consumption.

For instance, Bitcoin, the world’s largest cryptocurrency, currently consumes around 150 terawatt-hours of electricity annually. That usage is more than the entire country of Argentina, with a population of 45 million. Producing this much energy emits some 65 megatons of carbon dioxide into the atmosphere, annually — comparable to the emissions of Greece — making cryptocurrencies a significant contributor to global air pollution and climate change. In fact, Bitcoin uses 707 kilowatt-hours (kWh) of electricity per transaction, which is 11 times that of Ethereum, an another cryptocurrency.

For transactions, a cryptocurrency requires computers to solve complex math problems. As the use and transactions of the cryptocurrencies increase, the math puzzles become much complex as more people compete to solve them. Multiple miners use electricity in competition for rewards. Whereas, a 99.99 per cent of all the machines that did work just throw away the result since they didn’t win the race. It creates a lot of carbon emissions.

Like other industries, the cryptocurrencies face many challenges to going green – integrating truly sustainable practices into its operations, ultimately eschewing the pursuit of profit at any cost, etc.
It is really difficult to point out any one currency as being ‘greener’ than others as there are so many parameters that need consideration.

So, here’s our list of the top 5 cryptocurrencies making an effort to go green.

#1 SolarCoin

SolarCoin is a decentralized and global cryptocurrency. One can spend and trade SolarCoin like many other cryptocurrencies. The biggest difference would be that the platform aims to incentivize real-world environmental activity: verifiably produced solar energy.

Green Component:

SolarCoin has unique operating procedure. It creates and distributes a Solarcoin for every Megawatt hour generated from solar technology. The users upload documentation to prove energy generation through solar technology. This makes the cost of installation of solar array much cheaper by offsetting it through SolarCoin. When the value and price of a SolarCoin exceed the production cost of the energy, it becomes effectively free – the Solarity.

#2 Stellar

Stellar Network is operated by Stellar Development Foundation and was released in 2014. Stellar is an open blockchain network providing enterprise solutions by connecting financial institutions for the purpose of large transactions. Lumens are the Stellar’s tokens.

The network has a serious engagement – from IBM and Deloitte, as well as banking institutions in Nigeria, the Philippines, India, France, the South Pacific, and most recently Ukraine.

Green Component:

Stellar Consensus Protocol (SCP) is open-source and relies on authentication of transactions occurring through a set of trustworthy nodes rather than running through the whole network as a proof-of-work or even proof-of-stake algorithm. Its cycle for authentication is shorter and faster than most of the other cryptocurrencies. Hence, it keeps the costs low and energy uses minimum. The federated byzantine agreement, its algorithm, is an energy-efficient alternative to the Bitcoin-style traditional mining network.

Further, the network’s token, Lumens, facilitates the trades on the blockchain-based distributed ledger at a fraction of a cent and with high efficiency. The network also allows individuals and institutions to create tokens for use on the network, which has inspired some to use the network for sustainability initiatives such as investing in renewable energy.

#3 Cardano

Developed by the co-founder of Ethereum, Charles Hoskinson, Cardano functions mainly as a digital currency but can also be used for digital contracts, DApps, and other purposes. Its most amazing feat would be that compared to Bitcoin’s 7 transactions a second, Cardano can achieve 1000 per second.

Green component:

With those fast transactions, Cardano is a lot more energy efficient. Its ‘Proof of Stake’ consensus mechanism allow those participating in the currency buy tokens to join the network resulting in saving huge energy. Some claims state that the cryptocurrency network consumes only 6 GWh of power.

#4 Algorand

Algorand is another open-source, payments-focused blockchain network, aiming to solve one of the most persistent problems facing cryptocurrency: scalability. Algorand employs a proof-of-stake consensus mechanism that’s critical for securing blockchains and making sure no one can create new tokens out of thin air that they didn’t earn. The influence of each user on the network is proportional to their stake in the system.

Green Component:

Algorand does not involve mining and, hence, the network is trying to lead the way in blockchain sustainability by creating a carbon-negative network. Last year Algorand claimed that its blockchain is fully carbon neutral. It has partnered with ClimateTrade, a leader in carbon emissions transparency and traceability. In addition, algorithm doesn’t involve mining – an effort to create a carbon-negative network and improving sustainability.

#5 Nano

Nano was released in 2015. Nano is a cryptocurrency that was created to address some of the scalability issues associated with blockchain-based digital assets (such as bitcoin and ether). This includes high fees and slow transaction times. It uses a different kind of ledger technology known as directed acyclic graph (DAG). DAG is not a blockchain and doesn’t require mining. DAG ensures that instead of everyone contributing to a single ledger of transactions that everyone has a copy of, each Nano validator maintains their own individual blockchain – called an “account chain.”

Green Component:

Nano uses an energy-efficient Block-lattice technology. The Block-lattice is a structure where every user (address) gets their own chain that only they can write to, and each one holds a copy of all of the chains. Consequently, the cryptocurrency is known for its free, fast, and considerably fewer energy transactions than many cryptocurrencies.

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Junaid Shah

Junaid holds a Master of Engineering degree in Construction & Management. Being a civil engineering postgraduate and using his technical prowess, he has channeled his passion for writing in the environmental niche.