Blockchain And Cryptocurrency: Assessing Environmental Impact and Possibilities for Sustainability
Blockchain and cryptocurrency technologies have seen frequent use in recent years. With benefits such as decentralisation, ownership, security, transparency, and immutability, there’s no wonder why these technologies are considered the future for many industries.
That being said, the environmental impact of blockchain and cryptocurrency is a growing concern that is widely debated. While the impact of blockchain technology on society is an overall positive, it shouldn’t be used at the detriment of the planet we live in.
In this article, we look at the specific effects of these technologies on the environment and also explore how the features of blockchain can support sustainability efforts.
What is the environmental impact of blockchain and cryptocurrency?
Blockchain is considered bad for the environment by many experts because of its energy consumption. According to PwC, the required energy to keep Bitcoin running is as large as the energy consumption in Switzerland – and that’s just one crypto network alone. This use of energy contributes largely to greenhouse gas emissions, which then worsens the effects of climate change.
Additionally, the process in running Bitcoin and other cryptocurrencies involves the proof-of-work consensus mechanism – this is when computing power is used to verify blockchain transactions. That same computing power is responsible for tons of harmful carbon emissions going into our environment.
Lastly, with the evolution of more industries due to the blockchain, many old hardwares have become obsolete in favour of advanced equipment to generate computing power. This adds to the electronic waste that goes into landfills, which further harms the environment.
With all of these negative effects on the planet, the scepticism surrounding blockchain is quite understandable. There are, however, ways to practise blockchain sustainability.
How can features of blockchain support sustainability efforts?
The beauty of the continuous evolution of blockchain is that what once were issues regarding its environmental impact have now been addressed through various eco-friendly methodologies.
Choosing eco-friendly blockchain systems
While several blockchain systems do make use of lots of computing energy to function, there are others that are just as effective but employ a greener consensus mechanism.
For starters, Ethereum uses proof-of-stake rather than the more taxing proof-of-work mechanism, uses ETH rather than energy, and consumes only around 0.0026 TWh per year. Supporting sustainable blockchains can help reduce the greenhouse gas emissions via consuming less energy. It’s important to aim to opt for blockchain systems that use greener options, such as renewable energy sources.
Using efficient and eco-friendly hardware
As mentioned above, outdated hardware is a huge problem for sustaining your typical blockchain system. These all lead to more electronic waste that can cause harm to the environment.
What can be done is to go for hardware that is energy-efficient to reduce energy consumption. You can also optimise software and reduce idle time to ensure your hardware isn’t exerting too much effort and consuming too much energy.
Using blockchain for sustainability efforts in other industries
Aside from optimising blockchain and crypto within its network to be more eco-friendly, the use of blockchain in other industries can encourage sustainability in those fields as well.
For example, because of blockchain’s transparency, it’s much easier to track each part of the supply chain management process and check if certain regulations are being followed. Whether it’s the use of unsafe chemicals in the production of goods, or using non-eco friendly transportation to transport products, you can track it through the transparency of the blockchain.
Other blockchain sustainability practices include encouraging recycling through offering a tokenised reward to participants, using the technology to track carbon credits to control which select companies are allowed to emit carbon emissions, and so much more.
Blockchain and cryptocurrency’s environmental impact can be disastrous if not controlled or addressed properly. By knowing how the features of blockchain technology can support sustainability efforts and putting it into practice, you can help reduce the impact of blockchain technology on society.
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