Bitcoin and other cryptocurrencies have revolutionized the way we think about money. But what about their environmental impact? While there are genuine concerns related to its carbon footprint, we must also consider its societal benefits and how cryptocurrency can unlock global financial freedom. So, let's explore cryptocurrency, its environmental impact and how we can proactively offset its negative environmental impacts.
Environmental Impact of Blockchain Technology
First let’s talk about the environmental impact of cryptocurrency. Unfortunately this is largely due to the process of "mining" for new coins. Mining requires specialized hardware and a serious amount of energy, which often comes from non-renewable sources such as coal. This means that the environmental impact of cryptocurrency is directly related to its carbon footprint. But there are several ways to reduce the environmental impact of cryptocurrency:
- You could use renewable energy to power the mining process
- You can switch to a more efficient hardware that requires less energy to mine new coins
- A user can choose a more sustainable cryptocurrency to trade with
- Or you can offset carbon emissions via a specialist company
Why Switching To Digital Tender is Important?
Switching to digital tender means that coins and notes are no longer needed as all transactions would be carried out electronically. In doing so, transactions would be faster, cleaner and trackable. And often this means sending money overseas is safer too. This would also lead to a significant reduction in carbon emissions as there would be no need to print money. In fact, countries such as China have almost achieved a coinless economy, with over 80% of all transactions being carried out electronically. It is believed that sooner rather than later, other countries will follow in China’s footprints.
Cryptocurrency Supports Global Economic Freedom
Whilst some may argue that the carbon footprint created by some cryptocurrencies make it a bad choice for the planet, we must also consider its benefits to society as a whole. Being able to freely trade on a global scale without middle men taking a significant cut, cryptocurrency supports economic freedom. And this empowers those who live in developing countries too.
Having an alternative currency that will soon be accepted worldwide is a powerful move to make. Consider those who live in El Salvador for instance. Until recently, locals would use USD as their main currency, which can be controlled by the United States of America. But thanks to technology, they can now transfer some of their savings into a cryptocurrency in order to minimize their financial risk. In doing so, residents can send money overseas or back home if they’re working abroad, and avoid high transaction fees, and so will be better off financially.
While we’re yet to see how this move has helped or hindered the country, it is extremely interesting to see a country make such a fast and dramatic adoption of cryptocurrency in order to gain financial freedom. And it is this freedom that must not be overlooked when analyzing the environmental impact of cryptocurrency.
So the question is, does the social impact of blockchain technology outweigh concerns around its carbon footprint?
Two Types of Cryptocurrency
There are two different types of cryptocurrency to be aware of, before you can really argue its social, economic or environmental impact. The first is proof of work, also known as energy waster. The second is proof of stake, or energy-efficient. When people use the term mining, this is proof of work, since computers are working against one another to solve complex puzzles. In order to do so, a high amount of energy is required, and since the digital demand is so high, it’s considered the same as if you were to mine gold, silver or diamonds. For instance, Bitcoin uses the proof of work system which is why it’s often criticized for having a negative impact on the planet.
Proof of stake involves pinpointing a block based on the number of tokens they hold rather than having several miners try to compete against each other. In this way significantly less energy is required and this system also helps to prevent attacks and the use of counterfeit coins. So if cryptocurrency were to predominantly use the proof of stake system, the concerns regarding its carbon footprint would be minimal.
Another way to combat the cryptocurrency carbon footprint is to use sustainable cryptocurrency. Here are a handful of crypto currencies considered the most sustainable, each relying on the proof of state system. SolarCoin is a more sustainable cryptocurrency to use and aims to incentivize projects and activities that are good for the planet. In fact, it promotes the use of solar energy, which the creators believe should be a free source of energy for the planet. Another crypto coin to consider over Bitcoin is Nano. Unlike Bitcoin , Nano is free to use, fast and uses far less energy. Since it doesn’t rely on mining, it is a ‘green’ cryptocurrency that has been around since 2015. Nano helps its users transfer money overseas and without frees. TRON or TRX is a public blockchain based in Singapore. This cryptocurrency supports effortless transactions in an energy-efficient way. Listed on over 130 exchanges, TRON connects users across the globe and is considered a promising currency to invest in.
And there are also cryptocurrencies who are working hard to lower their environmental impact by collaborating with non-profit organizations. In fact, Australia Zoo has collaborated with Meadow Labs to create a unique Australian wildlife themed NFT collection, in order to provide a carbon-negative blockchain technology. And taking this a step further, 100% of primary proceeds are to be donated towards Australia Zoo and Wildlife Warriors conservation efforts. And this clearly demonstrates ways that organizations can come together and forge unique partnerships to support cryptocurrency adoption whilst protecting the planet.
Offset Cryptocurrency carbon footprint
At DutchGreen Business, we strive to help investors and companies offset carbon emissions and take part in projects to replenish the planet. Our vision is to become a leading green project developer in sustainably managed forests. In this way we can help those interested in investing in cryptocurrency and those mining such coins to reduce their environmental impact.