Humanity’s actions have led to many environmental problems, the consequences of which are now evident. The greenhouse effect, water and air pollution, deforestation, and the depletion of natural resources — all of this is a direct result of our activities.
To protect the only planet capable of supporting human life without special equipment, it is necessary to adapt our technology and business processes to the principles of sustainability.
One of the technologies that need to be optimized from an environmental standpoint is blockchain. Its impact on the environment so far has been significant, and not in the best way. Fortunately, there are already initiatives trying to make this industry more sustainable.
Let’s see what they are and how they can help protect the environment.
The Problem of Blockchain and Sustainability
The main problem with blockchain technology is that it consumes a lot of energy. The fact is that the more popular cryptocurrencies become and the higher their capitalization grows, the more energy they consume as well.
Today, Bitcoin alone consumes as much electricity as smaller countries. The reason for that lies in the consensus protocol some most used blockchain frameworks rely on — Proof of Work.
Proof of Work is a consensus algorithm that allows blockchain nodes to reach a consensus. Its main features are as follows:
- A block can be added to the chain only if the previously generated cryptographic puzzle is solved;
- To solve the puzzle, a node needs to spend computational power;
- The more computational power the node spends, the more likely it is to find the solution to the puzzle first and add a new block to the chain.
As you can see, this algorithm requires quite a lot of energy, which generates a lot of greenhouse gasses and other pollutants. According to recent estimates, the emission of greenhouse gasses from Bitcoin mining alone is comparable to that of countries like New Zealand!
However, as mentioned above, this negative impact on the environment can be rectified by adopting changes in technology. One of the most promising approaches here is using blockchain frameworks based on Proof of Stake instead of Proof of Work.
Proof of Stake
Proof of Stake (PoS) is a popular alternative to Proof of Work (PoW) in blockchain technology. It has gained popularity in recent years due to its ability to provide a more sustainable and environmentally friendly solution to blockchain validation while maintaining security and decentralization.
Instead of relying on the intense computational power of miners to validate transactions, PoS operates on the principle of “staking.”
Essentially, participants in the network are required to hold a certain amount of the cryptocurrency to be eligible to validate transactions. The more cryptocurrency held, the higher the chances of being chosen to validate the next block.
This solution not only reduces the energy consumption associated with PoW but also encourages long-term investment in cryptocurrency.
Switch to Renewables
The use of renewable energy is another way to make blockchain more sustainable. The fact is that if the energy used by miners is derived from renewable sources, the impact of blockchain on the environment will be minimal.
Countries could drive the effort, facilitating a switch from fossil fuel plants to solar, wind, and nuclear power — non-emissive energy sources.
In addition, individuals and organizations themselves could try to offset their blockchain-related carbon footprint by investing in renewable energy sources. To illustrate the point, buildings can be covered with solar panels, and the electricity produced could be used to power mining rigs. Doing so would offset the carbon footprint and reduce energy costs.
Building a solar or wind farm to power a mining operation might seem like a costly investment, but in the long run, it would pay off more than most can imagine.
Optimization of Equipment
Another way to make the blockchain more sustainable is to optimize equipment efficiency. Miners can do it in several ways:
- Using specialized hardware for mining, which is more energy-efficient;
- Minimizing heat loss by using proper cooling methods;
- Using equipment that can be upgraded to the latest and most efficient models as they become available.
These methods will not only help reduce energy consumption but also reduce costs. Plus, they are relatively easy to implement, making them an attractive option for miners who want to make their rigs greener.
Improved Regulatory Efforts
Regulatory efforts are also crucial in making blockchain more sustainable. Many countries are still in the process of developing legislation on cryptocurrencies and blockchain.
In most cases, these regulations do not take into account the environmental impact of this technology. As a result, in many places, miners can operate without any restrictions.
Improving regulatory efforts will help ensure that miners are required to follow certain environmental standards. For example, they could be required to use energy-efficient equipment or switch to renewable energy sources. Alternatively, the government could establish limits on the total energy consumption of mining operations.
These types of regulations would help make the blockchain more sustainable while still allowing it to develop and grow.
The blockchain industry is still in its early stages of development. Yet, even at this stage, it significantly impacts the environment. The main reason for this is the fact that blockchain technology consumes a lot of energy.
Fortunately, there are ways to make this industry more sustainable.
One of the most promising approaches is the use of blockchain frameworks that are based on Proof of Stake instead of Proof of Work. The use of renewable energy and the optimization of equipment efficiency can also reduce the environmental impact of blockchain. Finally, improved regulatory efforts will help ensure that miners are required to follow certain environmental standards.
Ultimately, these efforts can make the blockchain more sustainable and reduce its environmental impact.