Transforming the way we interact with technology, blockchain is poised to help us reach a more sustainable future. The transfer of value can happen seamlessly and without friction in an enterprise setting.
The “cryptocurrency futures” is a new financial instrument that will be playing a pivotal role in creating a sustainable future. The cryptocurrency market has been growing at an exponential rate over the past few years, and it is expected to continue to grow exponentially in the near future.
All blockchain-based initiatives are often criticized using Bitcoin (BTC). This is reasonable given that Bitcoin was the first project to utilize a blockchain, is perhaps the most well-known, and has the greatest market capitalization of any cryptocurrency.
Because most people equate blockchain with Bitcoin, I’ll use Bitcoin as a proxy for all blockchain-based initiatives in the first part of this essay. Because Bitcoin employs the earliest form of blockchain technology, everything beneficial that can be stated about Bitcoin in terms of the environment would be doubly true for the overwhelming majority of subsequent blockchain-based initiatives.
Energy use on the blockchain
Bitcoin has been chastised for its excessive energy use. A common criticism is that Bitcoin’s power use is similar to a country’s overall consumption. While comparisons are informative, they may sometimes be misleading in their presentation. The most often referenced numbers in these attention-getting headlines, for example, are from the Cambridge Center for Alternative Finance (CCAF). According to the same company, transmission and distribution energy losses in the United States could power the Bitcoin network 2.2 times. In the United States, always-on electrical gadgets use 12.1 times more energy than the Bitcoin network.
As a result, the Bitcoin network consumes about the same amount of power as a small nation, or a fraction of America’s energy budget. Is it a lot of money? It all depends on your perspective.
Is Bitcoin a waste of time and energy? Bitcoin mining’s benefits and drawbacks
Another common criticism is that Bitcoin’s power usage is increasing at such a fast rate that Bitcoin emissions alone might drive global warming past 2°C by 2020, or use all of the world’s energy. The latter did not occur. Why? To begin with, Bitcoin, like other network-based technologies, follows a “S curve” outlined by the theory of diffusion of innovations.
The curve’s spectacular, exponential-like expansion in the first half declines dramatically in the second half. Second, even if Bitcoin’s growth slows, huge and predictable advancements in computer efficiency will continue to cut the energy cost of computing. Third, such forecasts do not take into consideration Bitcoin’s changing energy mix.
Energy mix on the blockchain
The power utilized by computers that protect the network accounts for almost all of the energy used by blockchain initiatives. These are referred to as “miners” in Bitcoin, although newer blockchain projects may make use of considerably more efficient “validators.” Electricity is generated from a variety of sources, including coal, natural gas, and renewables such as solar and hydroelectric power. These sources may emit a wide range of carbon emissions, which affects their environmental effect to a considerable extent. In this research, the two most famous estimations of Bitcoin’s energy from renewables vary from 39 percent to 74 percent. Both of these figures are “cleaner” than America’s energy mix, which contains just 12% renewable energy.
There is evidence that the public attention that Bitcoin has received has likely insured that renewable energy will continue to grow in the future.
It is worthwhile to invest in blockchain technology.
Bitcoin’s energy usage and composition aren’t ideal, but they’re not as bad as they’re made out to be. The question of whether Bitcoin’s energy consumption is beneficial is often overlooked in the debate. Many companies use a lot of energy or create a lot of garbage, yet most people think the environmental costs are worth it. The agricultural business uses a lot of fossil fuels for fertilizers and field equipment, and it also produces a lot of damaging runoff. Despite the detrimental effects on the environment, we realize the critical significance of food production. Rather than abandoning agriculture, we work to enhance its environmental conditions.
Green Bitcoin: The Importance and Impact of Energy Use in PoW
Whether it’s helping the 1.7 billion unbanked to acquire financial inclusion or providing a viable alternative to exploitative international remittance systems, I believe Bitcoin is worth the effort. It’s becoming more evident that business blockchain is a pure public benefit.
Alternative blockchain technology consumes 99.95 percent less energy than previous blockchain technology. Because it can be customised for particular use cases, enterprise blockchain may consume even less energy. Enterprise blockchain is helping firms meet environmental objectives in addition to utilizing much less energy.
Blockchain as a driving force behind renewable energy
Solar and wind power are currently less expensive than coal and natural gas. Solar and wind power are now on par with geothermal and hydropower. Despite overcoming the cost barrier, renewables have a number of challenges that limit widespread implementation. Geothermal and hydroelectric power are both geographically limited. Solar, wind, and, to a lesser degree, hydroelectric power suffer from grid congestion and intermittency. They are now too unreliable due to their intermittency. The sun does not shine at night, the wind does not always blow, and there are wet and dry seasons. Grid congestion is akin to traffic congestion in cars. Renewable energy is often developed in rural locations due to topographical restrictions. The majority of energy is required in densely populated areas. The energy, like a vehicle stuck in traffic, takes longer to reach its destination.
There are several options, including as battery storage and increased transmission capacity, but they are costly infrastructure projects. This is where Bitcoin, and blockchain in general, may be of assistance. Bitcoin miners and other blockchain initiatives, on the other hand, may be built anywhere. Because they’re lucrative enterprises, they can effectively finance the construction of renewable infrastructure by repurposing any extra energy generated.
No, Musk, don’t blame Bitcoin for dirty energy – the situation is far more serious.
Person-to-person (P2P) power trade is another potential energy technology that is ideally suited to blockchain. These energy sharing systems allow electricity providers and users to exchange energy without the need of current third-party middlemen, hence increasing the amount of renewable energy available. Blockchain-based initiatives, like renewable infrastructure, will encourage the growth of peer-to-peer energy networks.
Material acquisition and provenance are made possible via blockchain.
The desire for more ethically based goods is constantly rising among consumers. Companies must demonstrate that their product is created ethically and in a manner that preserves the environment and public health. Consumers who are cautious about greenwashing have had to depend on company information. This dynamic is already being shifted by blockchain-based initiatives.
Everledger has developed tools to help consumers and businesses better understand the provenance of a particular asset. Everledger dramatically improves compliance procedures and helps firms to establish the genuine origin of their goods by merging blockchain, AI, and IoT.
Consumer confidence in food supply chains will be bolstered by transparency and traceability. Carrefour, the world’s biggest supermarket chain, and AB InBev, the world’s largest brewer, teamed up with enterprise blockchain developer SettleMint to create a digital traceability system based on dynamic QR codes applied to products during the packaging process.
Financing for the environment
The utilization of loans to promote sustainable businesses and finance their initiatives and investments is known as green financing. Closing the $2.5 trillion annual SDG budget gap, which is expected to widen, would be critical. The green bond (GB) market is an excellent example of green finance. The Climate Bonds Initiative estimates that $269.5 billion in green bonds will be issued in 2020.
Unfortunately, there are several issues with GBs, such as verifying that sustainability measures are accurate or that money were utilized to assist sustainability. Because blockchain can record this data in an immutable manner, projects may be validated to meet sustainability standards. Tokenization, for example, is one method that blockchain may assist.
How can blockchain technology aid in the battle against climate change? Experts respond.
“Even in markets where demand for green bonds is high because investors are motivated by ESG considerations, tokenization helps investors diversify their portfolio across different bonds because of smaller subscription sizes,” Oi Yee Choo, chief commercial officer at iSTOX, a Singapore-based digital securities exchange, said in this interview.
In terms of environmental sustainability, the blockchain business is now far from ideal. However, if it continues on its present path, the blockchain sector will not only be an example of environmental sustainability, but also a facilitator of it.
The author’s views, ideas, and opinions are entirely his or her own, and do not necessarily reflect or represent those of Cointelegraph.
Matthew Van Niekerk is the co-founder and CEO of Databroker, a decentralized data marketplace, and SettleMint, a low-code platform for corporate blockchain development. He has a bachelor’s degree with honors from the University of Western Ontario in Canada, as well as an international MBA from the Vlerick Business School in Belgium. Since 2006, Matthew has been involved with financial innovation.
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