The cryptocurrency industry has been growing exponentially over the past few years. However, with this growth comes increased pressure on the environment. And if the industry doesn’t start making some profound changes, it could have disastrous consequences.
CRYPTOCURRENCIES’ IMPACT ON THE ENVIRONMENT
Undoubtedly, cryptocurrencies have brought a lot of wealth and opportunity that massively impact the world economy. Bitcoin alone has a market capitalization of over $300 billion, and combined cryptocurrencies are currently worth over $900 billion.
You might be wondering how digital currency can impact the environment. After all, no physical mines or factories are required to produce cryptocurrencies. Well, it all has to do with the way cryptocurrencies are mined.
Cryptocurrencies are created through a process called “mining.” This process uses Proof of Work (PoW) algorithms, which require computers to solve complex math problems to validate transactions and add new blocks to the blockchain. In return, the miners are rewarded with a certain amount of cryptocurrency.
However, this process consumes a lot of energy. In fact, it has been estimated that Bitcoin mining uses 150 terawatt-hours of electricity annually—more than the electricity used by the entire country of Argentina.
What’s more, most of this energy comes from fossil fuels like coal and natural gas. So not only is cryptocurrency mining having a massive impact on the environment, but it’s also contributing to climate change.
Fortunately, there are some cryptocurrencies that are trying to do things differently. These “green” cryptocurrencies are working to reduce their environmental impact and make a positive difference in the world.
5 Most Green Cryptocurrencies
1. SolarCoin (SLR)
SolarCoin is a digital currency that’s awarded to solar energy producers. For every megawatt-hour (MWh) of solar energy produced, SolarCoin Foundation awards 1 SolarCoin (SLR) to the producer, which they can sell or trade for other currencies.
In addition, SolarCoin Foundation has chosen Energy Web Chain (EWC) as its blockchain partner, as it uses Proof-of-Authority (PoA) consensus, which requires low-carbon energy sources.
2. Chia (XCH)
Chia is a new cryptocurrency that’s trying to take on Bitcoin. And one of the ways it plans to do this is by being more environmentally friendly.
Unlike Bitcoin, which uses Proof-of-Work (PoW) consensus, Chia uses Proof-of-Space and Time (PoST). PoST doesn’t require high-powered computers or a lot of energy. Instead, it uses what’s called “farming.” Farmers store data on their computer hard drives, and in return, they are rewarded with Chia coins.
3. Cardano (ADA)
Cardano is a blockchain platform that’s similar to Ethereum. It allows developers to create decentralized applications (dApps) and smart contracts. What sets Cardano apart from other platforms is its emphasis on sustainability. Additionally, it’s powered by Proof-of-Stake (PoS), allowing anyone with a small amount of ADA to become a validator.
It’s also the first peer-reviewed blockchain platform built from the ground up. This means that the academic community has thoroughly vetted all of Cardano’s protocols, algorithms, and software. And its code is regularly audited by a team of researchers to ensure that the platform is secure and sustainable.
4. Algorand (ALGO)
Algorand is another cryptocurrency that uses Proof-of-Stake (PoS) consensus. As a result, it doesn’t require energy-hungry mining rigs or high-powered computers. Instead, anyone with a small amount of ALGO can become a validator.
Furthermore, for the small carbon footprint Algorand creates, it offsets it with a ClimateTrade partnership, meaning Algorand has been carbon negative since 2021. This was made possible by the Turing Award winner and an MIT professor, Silvio Micali, whose primary goal was to create a more sustainable blockchain platform that could scale to meet the needs of global institutions.
5. NANO (NANO)
NANO is a digital currency that uses a block-lattice structure. This means each user has their own blockchain. And each time users make a transaction, they only have to update their own blockchain.
NANO also uses Proof-of-Work (PoW) consensus. But unlike other cryptocurrencies that use PoW, NANO doesn’t require a lot of energy. That’s because it uses a system called “Open Representative Voting,” which allows users to vote for representatives who then validate transactions on their behalf.
Benefits of Investing in Green Cryptocurrencies
There are a few key benefits of investing in green cryptocurrencies:
Reduced environmental impact: Obviously, the biggest benefit of investing in green cryptocurrencies is that it reduces the environmental impact of cryptocurrency mining. So, if you’re concerned about the environment, investing in green cryptocurrencies is a great way to offset that.
Supporting sustainable projects: Another benefit of investing in green cryptocurrencies is that you’re supporting sustainable projects. For example, SolarCoin Foundation uses part of its funds to support solar energy projects worldwide. Therefore, by investing in SolarCoin, you’re not only reducing the environmental impact of cryptocurrency mining, but you’re also supporting renewable energy projects.
Potential financial rewards: Finally, investing in green cryptocurrencies can also be financially rewarding. That’s because as demand for green cryptocurrencies increases, so does their price.
As you can see, there are a variety of green cryptocurrencies that are trying to make a difference. While each one has its own unique approach, they all share a common goal: to create a more sustainable future for cryptocurrency.
So don’t just consider profitability and risk when investing in cryptocurrency. Consider the environmental impact as well. After all, we are all responsible for taking care of our planet. And if we want cryptocurrency to be around for the long term, sustainability is key.
Do you know of any other green cryptocurrencies? Let us know in the comments below!