It is no longer new that the United States has reaffirmed its commitment to reducing carbon emissions and actively participating in the normalization of green policies at the global level. This drastic change in policy-making will drive the adoption and establishment of stricter approaches to climate change. Undoubtedly, the re-entry of the United States into the conversation on climate change is an indication of the severity of this crisis and the drastic decisions that countries would likely make to meet the environmental goals set in Paris known as the Paris Agreement.
At the center of this political and economic restructuring is the growing impact of innovative technologies on the pursuit of a sustainable environment. You would expect that innovation should make a positive contribution to this movement. There is no point in investing trillions of dollars in new technology development without considering the long-term propensity to meet the Sustainable Development Goals by 2030, especially on environmental sustainability issues. Hence, it is imperative to analyze the viability of the blockchain through the critical lens of an environmentalist.
Connected: Blockchain technology makes goals for sustainable development more achievable
Is there a place for blockchain in an environmentally conscious society?
Blockchain has become one of the most revered technologies in recent years due to the growing adoption of digital assets. The ability to enable a new order of monetary services has propelled technology into the sacred realm of innovation powerful enough to fuel the fourth industrial revolution. Currently, however, the most widespread application of blockchain technology – Bitcoin (BTC) – is attracting unsolicited advertisements for its role in climate change.
Connected: The United Nations “Decade of Delivery” needs blockchain to be successful
Bitcoin uses a process called mining to mint new coins. This requires miners to solve highly complex problems using advanced adding machines to create new blocks and receive new coins as rewards. It goes without saying that this mechanism plays a crucial role in securing the network against tampering and duplicate spending. Since Bitcoin is based on a decentralized consensus approach, it’s understandable that it tried to replace intermediaries with a node-based verification system known as proof-of-work. Here, the obligation to allocate computing power to the network improves the chances of temporarily appearing as a stakeholder.
Connected: Bitcoin Mining: The Next Decade of Sustainable Crypto Innovation Begins Today
While this approach is laudable, it is not environmentally friendly. The amount of energy needed to maintain the Bitcoin network has been put through an intense scrutiny. The carbon footprint of global Bitcoin mining is comparable to that of New Zealand. Another telling factor in PoW’s environmental impact emerged in 2019 when researchers discovered that bitcoin mining accounts for 0.2% of the electricity consumed worldwide.
Connected: Is Bitcoin a Waste of Energy? Pros and Cons of Bitcoin Mining
How can blockchain become more environmentally friendly?
Notably, the burgeoning but explosive blockchain industry has developed several other consensus models. These alternatives are designed to remove the limitations of the proof-of-work mechanism. As such, they are more in tune with the environmental movement. Some of the models introduced over the years are Proof-of-Stake, Practical Byzantine Fault Tolerance, Burn-Proof, and Weight-Proof. Rather than getting miners to solve problems, these models opt for less energy-intensive tasks to secure blockchain networks and validate transactions.
For example, PoS elevates participants who are financially committed to the ecosystem to the role of validators. Here the algorithm selects validators from a group of people or entities who have blocked a required number of coins on the blockchain.
Alternatively, proof of weight puts a strain on participants ‘resources or reputation in selecting validators, while proof of burn evaluates network members’ ability to burn coins and sends coins to an unrecoverable address. In particular, all of these models deviate from the power-consuming approach of PoW and handpick validators because they work to keep the network in a healthy state.
Blockchains should include environmentally friendly measures
Regardless of the backlash caused by energy consumption from crypto mining activities, reports have documented the operational shift of miners from unsustainable energy sources to renewable alternatives. Coinshares reported that the Bitcoin mining energy mix in 2019 was 74.1% due to the concentration of the mining sector in countries or regions with cheap hydropower electricity. While this proves that the blockchain community is environmentally conscious, it does not remove the threat Bitcoin mining poses to the environment.
Today more than ever, technologies are measured by their energy efficiency. For one, existing and new PoW-powered blockchains can set up special coin rewards for miners who rely solely on clean energy. Aside from providing incentives to use renewable energies, they can punish defaulters. Blockchain networks can refuse to make payments to miners who cannot prove they are using green energy.
Connected: The future of bitcoin mining is green and Russia has the best chance
Blockchain implementations for businesses
As mentioned earlier, Bitcoin is an energy consuming company because it focuses on maintaining the decentralization of its network. For blockchain applications that do not necessarily require an element of decentralization, there is no reason to implement very sophisticated consensus models. With most organizations attempting to enable approved blockchain infrastructures, it is safe to say that the influx of such networks would mitigate the current narrative. We are constantly reminded of the untenability of the blockchain as the most popular blockchain applications depend on mining. As the technology matures, more innovative and environmentally friendly iterations will inevitably emerge.
As highlighted in this text, the viability of blockchain technology and its environmental sustainability are intertwined. For what it’s worth, the emergence of a multitude of consensus mechanisms is an indication that the deliberate attempts to contain the excesses of blockchain energy consumption are already yielding results.
This article does not contain any investment recommendations or recommendations. Every step of investing and trading involves risk, and readers should do their own research in making their decision.
The views, thoughts, and opinions expressed here are the sole rights of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Andrey Sergeenkov is an independent researcher, analyst, and author in the cryptocurrency niche. As a firm advocate of blockchain technology and a decentralized world, he believes the world calls for such decentralization in government, society and business. He is the founder of BTC Peers, an independent media company.