aware_ dives into the environmental repercussions of Bitcoin and explores the rise of eco-friendly cryptocurrencies.
The release of the first cryptocurrency brought with it widespread intrigue. Up until 2009, the year which saw the release of Bitcoin – which many investors argue was the first cryptocurrency – traditional banks ruled the world of finance. Although Hashcash – one of the most successful pre-bitcoin digital currencies – had its moment in the 1990s, the last 10 years have seen the financial and technology markets become saturated in cryptocurrencies. But what lies behind cryptocurrencies initial success? Tired of traditional, centralised, closely monitored methods of banking, consumers and investors have become attracted to the decentralised nature of cryptocurrencies. One of the conditions required for the qualification of a cryptocurrency is, “the system does not require a central authority; its state is maintained through distributed consensus” (Jan Lansky). In 2009, mining – “the process through which new Bitcoins are created and transactions are recorded and verified on the blockchain” (Forbes) – begins. The first Bitcoin are traded in 2010 when, in exchange for two pizzas, someone sells 10,000 Bitcoin. According to a Forbes article back in 2017, if the buyer had kept the 10,000 Bitcoin until 2017, it would have been worth more than $100 million (Forbes). Sounding too good to be true? We think so too. Despite initial suggestions that mining and trading cryptocurrencies promised to become the environmental antidote to banking, research suggests that mining Bitcoin has catastrophic implications on the planet. Monitoring of Bitcoin energy consumption reported that one single Bitcoin transaction uses 2277.13 kWh, the equivalent of an average US household’s energy consumption over 78 days (Digiconomist).
“In 2020, the bitcoin network consumed a reported 131.80 TWh of power to execute the algorithms that power its “mining” operations. This is equivalent of the power consumed by Argentina.” (WeForum)
Despite damning statistics, by 2020, Bitcoin seemed to be unstoppable. In January of that year, after adding #bitcoin to his Twitter bio (WeForum), Elon Musk sent the value of Bitcoin soaring, raising the value by $5,000 within the hour. Subsequently, Tesla introduced the option to purchase their cars using Bitcoin, only to reverse that decision of May 2020 after widespread environmental concerns. Consequently, the value of bitcoin sank from $64,829 to $30,000. The volatile nature of bitcoin allowed for a new way of thinking: eco-friendly cryptocurrencies. The last few years have seen the emergence of cryptocurrencies which continue to embrace decentralised systems, whilst prioritising the wellbeing of our planet. The defining difference between bitcoin and eco-friendly cryptocurrencies? Bitcoin depends on a “Proof of Work” system (which requires vast calculations, and therefore processing power), whilst crypto’s which employ “Proof of Storage” systems employ block-lattice, a technology that doesn’t require mining. (Leaf Score)
aware_ presents 5 eco-friendly cryptocurrencies on a mission to make a difference:
Solar Coin does exactly what it says on the tin. This leading example for eco-friendly cryptocurrencies distributes coin as a reward for the creation of solar energy. Their aim since 2014 has been to incentivise the production of solar energy by reducing the cost of the production of electricity through its reward scheme.
“Our goal and 40-year mission since 2014 is to incentivize solar electricity production by rewarding the generators to reduce the cost of electricity production.
Solar energy is now produced at below US$12/MWh on some parts of the planet, and the cost keeps dropping.” – Solar Coin
Nano is a digital, no-fee currency, making it available to anyone with access to a computer. Nano, unlike Bitcoin, does not rely on mining or printing to operate. Prioritising fluidity between countries, Nano provides a seamless transaction for both local and international payments at no fee to the user.
“Just like the cash in your pocket, choosing to transact with nano ensures that 100% of the value is transferred directly to the recipient.” – Nano
Gridcoin is a blockchain currency that capitalises on sleeping computer power to “to carry out scientific research through the Berkeley Open Infrastructure for Network Computing (BOINC)” (LeafScore). Founded in 2013, Gridcoin employs a Proof-of-Stake algorithm: a class of mechanisms used by some eco-friendly cryptocurrencies that work to avoid the computing costs necessary for proof-of-work, which is used by Blockchain.
“Gridcoin is an open-source cryptocurrency (Ticker: GRC) that rewards volunteer computing for science through the BOINC platform. BOINC is an open source platform for volunteer computing that lets individuals use their computers & phones to help science research.” – Gridcoin
Chia is the decentralised cryptocurrency bringing hard drives back into fashion. Using a proof-of-space system, the “farming” process necessary to lend currency employs the humble hard drive, reducing e-waste and re-using a secure form of storage. It appears to be working, Chia “uses 0.16% of the annual energy consumption of Bitcoin”.
“Chia is the most decentralized blockchain ever with approximately 350,000 nodes employing the first new Nakamoto Consensus since 2009. The Chialisp on chain programming environment is fully featured while being far more auditable, and secure.” – Chia
Bitcoin is renowned for its instability. Iota – blockchain, mining free – is the cryptocurrency prioritising stability and sustainable financial investment. Whilst it has not reached the heady heights of some of its competitor’s success, Iota prides itself on its scalability, low resource requirements, zero-fee and fast transactions.
“IOTA is the first distributed ledger built for the “Internet of Everything” – a network for exchanging value and data between humans and machines.” – Iota
– by Eliza Edwards