Some cryptocurrencies like Bitcoin and Ethereum have been criticized for their alleged energy expenditure and subsequent environmental impact. Yet, Blockchain technology may be used as a tool to fight climate change.
It is difficult to estimate how much energy is needed to mine cryptocurrencies. Bitcoin was at first mined with a basic computer but the mining difficulty gradually increased and now requires much more computing power, as well as cooling systems and multiple graphics cards. This led to higher energy usage for decentralized networks like Bitcoin and Ethereum.
One estimate from the New York Times says that the Bitcoin network uses about 91 TWh of electricity per year, which is more than a country like Finland. There have, however, been disagreements on the exact energy usage. Digiconomist said Bitcoin uses 0.82% (204 TWh) of the global power and Etherium uses 0.34% (85 TWh). The University of Cambridge estimated the actual Bitcoin consumption of energy to be lower – 125 TWh.
“To say that Bitcoin is ‘bad’ for the environment leaves a number of nuances and important conversations unexplored,” R. A. Wilson, chief technology officer of 1GCX, told Cointelegraph. “(…) The sheer amount of energy consumed doesn’t directly equate to environmental impact. It is also important to understand where that energy is coming from. Currently, Bitcoin miners use around 55%–65% renewable energy, which is impressive for an industry so relatively young. Comparatively, the sustainable energy mix in the United States is only 30%.”
In 2022, sustainable power sources for Bitcoin have increased by almost 60%, and Blockchain has been used for carbon removal and alongside carbon credits.
There are many examples of organizations that use blockchain toward advancing climate goals. On the EarthFund platform, users can donate crypto for environmental causes.
During the Middle East and North Africa Climate Week, the United Nations Environment Programme and other government organizations explored blockchain’s potential to counteract climate change.
Earlier this year, cryptocurrency protocol Algorand announced that its blockchain achieved full carbon neutrality.